Islamabad: Under a $2 billion deal to be signed during the Chinese president's visit to Islamabad later this month, China will build a pipeline to bring natural gas from Iran to Pakistan to help address Pakistan's acute energy shortage, officials here said.
"We're building it. The process has started," The Wall Street Journal quoted Pakistani Petroleum Minister Shahid Khaqan Abbasi.
Pakistan has reportedly been negotiating for months with China to build the pipeline. The much-needed gas will help Pakistan fuel its power-generation plants and relieve it from crippling power shortages.
The plan was conceived in 1995 under the "Peace Pipeline" scheme, which would extend to India but New Delhi backed out under US pressure.
Iran has completed its portion of the project, which includes a 900-km pipeline extending from Assaluyeh on the Persian Gulf to its border with Pakistan.
Pakistan has not started construction fearing it might anger the US. The country has asked the Iranians and the Chinese to build it in order to avoid possible US sanctions.
Islamabad was reportedly negotiating with China Petroleum Pipeline Bureau, a subsidiary of Chinese energy giant China National Petroleum Corporation, to complete the project.
It includes building a 700-km pipeline from Pakistan's port of Gwadar to Nawabshah and hook up to the nationwide gas grid from there.
According to the Journal, China will fund 85 percent of the project and Pakistan will foot the rest of the bill.
Pakistan will also build the remaining extension of the pipeline from Gwadar to the Iranian border for a length of 80 km.
Pakistan foreign office spokesperson Tasneem Aslam on Thursday said Chinese President Xi Jinping is scheduled to visit Pakistan this month but the dates were yet to be finalised.