Pak-Iran economic relations

[Salman]

Pak-Iran economic relations

Trade and economic relations between the Islamic Republic of Iran and Pakistan are based on diverse axes such as energy, infrastructural cooperation, financial assistance and commercial exchanges.

Cooperation between Iran and Pakistan in the energy sector comprises two spheres, namely gas and electricity. The agreement on the export of Iranian natural gas to Pakistan called "IP pipeline" was signed in 2009, and its legal and supplementary annexes were concluded between the two countries in 2010, which is scheduled to be commissioned in the year 2014. For this purpose, the exchange of technical and expert delegations between the gas companies of these states is taking place intermittently.

Likewise, cooperation between them in the electricity sector includes the export of 37 megawatts from Iran to the bordering areas of Balochistan, the largest province of Pakistan, which has recently been increased to 70 megawatts; the 100 megawatt electricity project in Gwadar that links Iran's electricity network with Pakistan; the long-term project of importing 1,000 megawatts (and even more) electricity to the nationwide electricity network of Pakistan, and transfer of up to 10,000 megawatts of electricity to the country.

Moreover, infrastructural cooperation between Iran and Pakistan pertains to the two sectors such as transportation and reconstruction. The transportation sector is divided into three areas - road, railway and aviation. In road cooperation, the project of repairing the transit common border, Nushki-Dalbandin-Quetta road, stretching to 350km inside Pakistani territory; in railroad sector, the Islamabad-Tehran-Ankara (ECO) container train; and in aviation sector, the operation of flights linking the cities of Lahore-Mashhad and Tehran-Karachi, could be mentioned as good examples between the two countries.

In the reconstruction sector, house building, establishment of educational and health centres in rural areas, as well as the regions located along border of Balochistan, within the framework of development aid of the Islamic Republic of Iran to Pakistan, and also its financial assistance and commitments for the reconstruction of flood-hit areas are worth mentioning. Following the recurrence of floods in Sindh last year, the Iranian Interior Minister, along with the agenda of extending assistance to people of these areas, travelled to the country. Simultaneous with this visit, and with the dispatch of aid worth $500,000, including tents, blankets, food stuff, garments, medicine and health material, the total emergency assistance of the Islamic Republic of Iran to the flood-hit people of Pakistan since the occurrence of the floods in 2010, have amounted to about $20 million.

Also, in view of the promise to extend $100 million aid by Iran to rebuild the flood affected areas and on the basis of the accords reached by the Crisis Control Headquarters of the Interior Ministry, with the National Disaster Management Agency (NDMA) and the Red Crescent Society of Pakistan, the subject of establishment of educational and health centres was put on the agenda of the aforementioned Iranian institution.

Commercial exchanges between the Islamic Republic of Iran and Pakistan stands at $1.5 billion out of which namely $500 million relate to Pakistani exports. The export items of Iran comprise articles such as iron ore, iron scrap, dates, detergents, transformers, chemicals, bitumen, polyethylene, propylene etc, while export items of Pakistan include rice, fresh fruits, meat cloth and mechanical machinery. Whereas a major volume of commercial exchanges between the two countries takes place unofficially through the common borders, the actual volume is estimated to be twice the aforesaid figure. Also, oil is a major product that has constantly preserved its position in the exports of the Islamic Republic of Iran to Pakistan.

The article has been contributed by the Iranian Embassy.