It doesn’t require rocket science to decipher why the Chinese Bank ICBC backed off from financing the Iran-Pakistan gas pipeline project. Any bank in the world doing business with the West would be reluctant to face the economic consequences of defying the US sanctions imposed on Iran. However, the government’s efforts to complete the project by the December 2014 deadline have hit a snag.
Defying US pressures, Islamabad has given top priority to the construction of the pipeline to overcome its dire energy needs. Besides the IP gas pipeline, Pakistan has also gone for the 1,700 kilometre TAPI gas pipeline from Turkmenistan favoured by the US. Islamabad is now required to find new financiers at the earliest. Among the alternatives available is the routing of the Infrastructure Development Cess, recently imposed on gas consumers, to Pakistani banks which should then create a fund with the government. Initial estimates suggest that the cess will be sufficient to meet the project’s funding requirements. It remains to be seen however if the local banking sector which is already overexposed in the power sector and is reluctant to finance existing and new power projects would agree to the proposal. Again would these banks be willing to withstand the US pressure as they are all are involved in business abroad? Another alternative is to approach the Chinese, Russian or Iranian governments for signing a government-to-government contract for the construction of the pipeline. This would however require waiving off the public procurement regulatory authority rules to avoid competitive bidding which is demanded by these countries.
The reluctance by the ICBC is in no way a reflection on the all-weather friendship between China and Pakistan. It is quite normal for countries to give priority to their own national needs and concerns. What must be borne in mind is that it is unrealistic to think that China or any other country would sacrifice its core interests for Pakistan. There is a need on the part of the establishment, the political government and media to avoid creating unrealistic expectations among the public.
