Commerce Minister Khurrum Dastagir has said the lifting of sanctions on Iran by major powers has provided historic opportunities to raise bilateral trade and investment.
He said that Pakistan would export over $1 billion worth of products, ranging from textiles to rice, and thousands of tonnes of mangoes, after lifting of nuclear-related sanctions from trading with Tehran, and on completion of the Iran-Pakistan gas pipeline, Khaleej Times reported.
“Pakistan and Tehran have completed their arrangements to resume full scale trade, alongside boosting trade, the move will also help Pakistan beat the energy crisis, raise output and shore up dwindling exports, as the stalled and sanctions-hit Iran-Pakistan (IP) gas pipeline project gets completed,” he said.
Dastagir stressed that the first priority is to resume and boost trade. “We are waiting for the remaining sanctions to be struck down to start exporting to Iran on a fast track basis.”
According to the Khaleej Times report, Iran had vowed to supply Pakistan with 4,000 MW of electricity, of which it was already providing 200 MW. Iran also announced plans to build a big oil refinery at the new South-Western Pakistan port of Gwadar.
The two sides would move ahead on all these plans. The IP project, as confirmed by Iranian Foreign Minister Javad Zarif, in August 2015, in Islamabad had envisaged laying down of 1,800km of pipeline from Iran to Pakistan at a cost of $7.5 billion. Iran already completed its portion of the pipeline in 2013.
Tehran-based Tadbir Energy Development Group is expected to lay down the Pakistan portion to the city of Nawabshah, which will cost $250 million, and will be completed in 15 months. Part of the financing will be done by Iran.
Javad, and his Pakistani counterpart Sartaj Aziz, had also proposed cooperation in several other fields, after the US sanctions are lifted. These included greater trade, and Iran building Pakistani projects ranging from energy to petrochemicals, and food to fuel.
“We are just waiting for a signal from the Iranian Central Bank, and the commercial banks, to have straightened up all the requirements to transfer export funds to Pakistan,” a spokesman of the State Bank of Pakistan said, while responding to a query.
“The banking channels in Iran have to be fully streamlined to avoid any problems, which Pakistani exporters had faced in the past.”
Payments for large trade from Pakistan will now be quite feasible as Iran has ample cash in the form of foreign exchange resources from its current forex earnings as well the unfreezing of its more than $100 billion of funds which the US and Western banks, had kept frozen during the prolonged sanctions.
“New circumstances merit signing the proposed FTA for an enhanced cooperation for mutual benefit of the two countries. The banking sectors of Pakistan and Iran will establish active linkages within weeks to facilitate traders to get their payments.”
Iranian banks now have to handle much larger two-way inflows. Unlike in the past, they will now have larger dollar and hard currency resources to pay to Pakistani exporters.
