ISLAMABAD, Dec 14: The Iranian government formally withdrew on Saturday its offer to partially finance the laying of the multi-billion dollar gas pipeline to Pakistan.

In comments posted on Iranian petroleum ministry’s website, deputy petroleum minister Ali Majedi said it was Pakistan’s responsibility to lay the gas pipeline on its side.

Iran had pledged in February this year to provide $500 million to Pakistan for laying the pipeline. The groundbreaking of the long delayed pipeline project was performed after the Iranian assurance.

However, the long delayed project once again ran into uncertainty following the change in government in Islamabad after the May 11 elections. The PML-N government initially looked hesitant in going ahead with the project because of US sanctions and Saudi pressure, but renewed the interest following the landmark US-Iran deal over the nuclear programme.

Pakistan’s petroleum minister Shahid Khaqan Abbasi, who visited Tehran earlier this month, had asked the Iranian authorities to review the deadline for completion of the project saying sanctions on Iran were making it difficult to finance it.

After Mr Abbasi’s Iran visit, the Foreign Office had said in a statement: “Pakistan and Iran have decided to fast track implementation of the IP gas pipeline project and to formulate a roadmap to address the challenges and have effective coordination and cooperation on this significant project.”

The Iranian announcement on cancelling the loan offer reflected its frustration about Pakistan’s attitude towards the project. Cross-border militant activity is also thought to have increased Tehran’s mistrust about Islamabad.

“Iran’s petroleum minister Bijan [Namdar] Zanganeh recommended Islamabad to demand help from third-party companies for the completion and acceleration of the project on the Pakistani soil,” Ali Majedi was quoted as having said. He also asked Pakistan to seek financing from European companies.

Mr Majedi said: “Iran has so far invested two billion dollars in this project and it is likely that this sum would rise to nearly three billion dollars when the project would be completed. The construction of the Pakistani side of this pipeline is estimated to cost between two and 2.5 billion dollars.”

The projected 2,800-km pipeline is planned to extend from Iran’s giant South Pars gas field to Pakistan. Iran has already built 907km of its 1,227-km share of the pipeline.

A team of Iranian experts is due to visit Islamabad in coming days for discussions on the project.

AP adds: Mr Majedi says Iran has no obligation to finance the Pakistani side of the project and also doesn’t have the money.

He said Tehran will demand compensation if Islamabad fails to take Iranian gas by end of next year.

There are serious doubts about how Pakistan could finance the $2 billion needed to construct the pipeline.