Islamabad: As Pakistan pushes ahead with an ambitious gas pipeline with Iran despite objections from the US, a leading think tank here warned the project would be a "death sentence" as the prices are too high.
Sustainable Development Policy Institute (SDPI) said in a report that the contract with Iran means the gas sold to Pakistan likely will be several times more expensive than domestic gas.
"This is a death sentence for Pakistan's economy," the report said.
Presenting the report, Arshad Abbasi, energy advisor of SDPI, said gas and oil have become an outdated phenomenon all over the world with the expansion of shale gas.
"Pakistan needs to re-negotiate the price of the gas it intends to buy from Iran," Abbasi said yesterday.
He was of the view that by modernising existing thermal power plants, efficiency and production will increase and Pakistan’s reliance on foreign resources will decrease.
Shamsul Mulk, former Chief Minister of Khyber-Pakhtunkhwa, said Pakistan needs to import gas but the importance of mutual benefits regarding the pipeline project cannot be ignored and the country should not compromise on pricing issues.
Pakistan has asked Iran to construct the Pakistani side of the pipeline because international sanctions are preventing Islamabad from raising funds for the USD 7.5 billion project.
The Iranian side of the pipeline is almost complete but Pakistan has run into repeated problems in paying for the 780-km section to be built on its side.
The long-delayed project was inaugurated in March when former Iran President Mahmoud Ahmedinejad came to Pakistan but construction is yet to begin.
US laws call for automatic sanctions on states and financial organisations that invest in Iranian oil and gas projects.