Pakistan, Iran sign agreements eyeing $10 billion trade, stress cooperation to eliminate militancy

Iranian President Masoud Pezeshkian meets with Pakistani Prime Minister Shehbaz Sharif in Islamabad, Pakistan, on August 3, 2025. (Iran's Presidential website/WANA/Handout via REUTERS)
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Updated 03 August 2025
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Pakistan, Iran sign agreements eyeing $10 billion trade, stress cooperation to eliminate militancy

  • Both countries exchanged 12 agreements, memorandums of understanding for bilateral cooperation in diverse fields
  • PM Sharif, President Pezeshkian urge the international community to act swiftly to resolve the deepening hunger crisis in Gaza

ISLAMABAD: Pakistan and Iran have signed agreements in the fields of politics, economy, culture and other vital sectors, Iranian President Dr. Masoud Pezeshkian said on Sunday, as Tehran and Islamabad eye raising their bilateral trade to $10 billion.

Pezeshkian arrived in Pakistan’s capital on Saturday on a two-day state visit to increase bilateral trade and strengthen relations between the two countries.

Pakistan and Iran have remained at odds over instability along their shared, porous border that even led to a missile exchange between them last year. Both countries, however, were quick to move to ease tensions.

Iran and Pakistan have attempted to forge closer economic and investment ties through border markets and trade links in recent years.

“My deep belief is that we can easily, in a short time, increase the volume of our trade relations from the current $3 billion to the projected goal of $10 billion,” Pezeshkian told reporters during a joint press conference with Prime Minister Shehbaz Sharif and high-level delegations from both countries in attendance.

“We reached good agreements in the political, economic, commercial, and cultural fields during this visit,” he said.

The Iranian president said Islamabad and Tehran had signed “important documents” that would facilitate and promote bilateral ties in commercial, cultural, tourism, transportation and scientific and educational exchanges between the two nations.

“The development of transit routes, railroad and sea routes, the development and equipping of border markets facilitating trade and the establishment of joint free economic zones, are serious needs in the relations between the two countries,” Pezeshkian noted.

“And we had constructive discussions on those issues.”

Pakistan and Iran routinely trade blame for not tackling militancy in their shared border areas. The Iranian president said the issue had come up in talks between both sides.

“Also, given the threats from terrorist groups in border areas, increasing cooperation between the two countries to ensure border security and the peace and comfort of citizens in border cities was emphasized,” he said.

The Iranian president condemned Israel for its military operations in Palestine, Syria and other areas of the Middle East, calling for the cessation of hostilities in Gaza.

Sharif welcomed the Iranian president to Pakistan and said the two sides held fruitful discussions on culture, religion, history and geography.

He condemned Israel’s attack on Iran’s nuclear facilities in June, saying there was no justification for the attacks. Both leaders also called for an unconditional ceasefire in Gaza.

Both countries exchanged 12 agreements and memorandums of understanding (MoUs) for bilateral cooperation in diverse fields, Pakistani state media reported.

The agreements included collaboration in science, technology and innovation, cooperation in information and communications technology, exchange programs for culture, art, tourism, youth, mass media and exports, cooperation in meteorology, climatology and related hazards, maritime safety and firefighting, judicial assistance in criminal matters, product certification, inspection and testing, and tourism cooperation.

The Pakistani prime minister hoped the memoranda of understanding signed between Pakistan and Iran would “soon” convert into agreements.

“Mr. President, today we have signed many MoUs and it is my prayer and your wish that these MoUs become agreements very soon,” Sharif said.

“And it is your wish and mine too that we achieve the target of $10 billion in trade as soon as possible,” he added.

He said Iran and Pakistan had the same stance when it came to “terrorism,” adding that both countries were opposed to it.

Sharif vowed that Pakistan and Iran, through partnership and cooperation, would take steps against militants to ensure peace in their border areas.

In a meeting with President Pezeshkian later, PM Sharif reaffirmed Pakistan’s solidarity with Iran after it fought “Israel’s aggression” in their 12-day war in June. He also thanked Iran for its strong support to Pakistan during a Pakistan-India military standoff in May, according to Sharif’s office.

During the talks, both sides also exchanged views on important regional and global developments.

“The Prime Minister thanked the Iranian leadership for Iran’s vocal and active support for the innocent Palestinian people, who have been suffering brutal aggression at the hands of Israeli security forces,” Sharif’s office said in a statement, calling for an immediate end to “Israeli barbarity” against innocent people of Gaza who were being “forced to starve.”

“Both leaders urged the international community to act swiftly to resolve this crisis.” 


Pakistan’s domestic power sources cushion LNG supply risk from Middle East war — minister

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Pakistan’s domestic power sources cushion LNG supply risk from Middle East war — minister

  • Pakistan less exposed to LNG disruptions as domestic power rises, Power Minister Leghari says
  • 74% of power now from local sources, targeting 96%, LNG accounts for 10% of power generation

KARACHI: Pakistan’s growing reliance on domestic power, ​including solar and wind energy, nuclear reactors, coal and hydropower, has reduced its vulnerability to global LNG supply disruptions, Power Minister Awais ‌Leghari told Reuters.

The war in the Middle East threatens shipments from Qatar, the world’s No. 2 producer after the US which supplies most of Pakistan’s imported LNG, used to fuel power plants during peak electricity demand.

“Pakistan has been steadily increasing reliance on indigenous energy resources, and about 74% of our electricity generation now comes from local sources,” Leghari said, adding the ​government aims to raise that above 96% by 2034.

The figures have not been previously reported.

“The people-led solar revolution, and earlier decisions to invest ​in nuclear, hydropower and local coal have all played a role in increasing Pakistan’s self-reliance,” he added.

Pakistan has long struggled ⁠with electricity shortages and historically faced hours of daily load shedding during peak summer demand.

The country now has surplus generation capacity after adding coal, ​LNG and nuclear plants, while demand growth has slowed and the use of rooftop solar has surged, at times exceeding grid demand in some hubs.

Outages still occur in ​parts of the country due to theft, line losses and financial constraints, rather than a lack of power.

‘WORST-CASE SCENARIO’

Qatar halted LNG production earlier this month, and Asian nations, who buy 80% of its output, are scrambling to meet the shortage.

LNG now accounts for about 10% of Pakistan’s electricity generation, mainly used to meet evening demand peaks and stabilize ​the grid, Leghari said.%

During the global energy crisis triggered by Russia’s invasion of Ukraine in 2022, the country was forced to cut power for extended ​periods after failing to secure LNG cargoes on the spot market.

“Even if LNG was disrupted or became too expensive, the impact on production capacity, industry or agriculture would ‌be minimal,” ⁠Leghari said.

But he said prolonged disruptions could still lead to additional shortages during summer, when demand surges from the use of air-conditioners.

“In a worst-case scenario, if LNG cargoes stopped for several months, Pakistan might see one to two hours of load shedding during peak summer evenings,” Leghari said.

Such outages would likely affect some urban and rural areas, not industry or agriculture, he said, adding Pakistan is developing battery storage to shift excess daytime solar to evening ​peaks.

Pakistan canceled 21 LNG cargoes due in 2026-27 ​under a long-term deal with ⁠Italy’s Eni as domestic power and solar growth cut gas demand.

LOCAL AND GREEN

Pakistan is not expected to invest in any source of power that could put it at risk in terms of energy security,” Leghari said, saying the government’s ​plans for the next six to eight years is to focus on indigenous clean power.

About 55% of electricity ​generation now comes from ⁠clean sources, which the government aims to raise above 90% by 2034, Leghari said.

Hydropower produces about 40 terawatt hours of electricity annually, while nuclear generates roughly 22 TWh and domestic coal about 12 TWh, according to the minister, forming a significant share of Pakistan’s electricity supply without relying on imported fuel.

Rooftop solar installations ⁠have surged ​to more than 20 GW across Pakistan, with behind-the-meter capacity estimated at 12–14 GW and ​possibly up to 18 GW, sharply reducing daytime grid demand, he said.

Hydropower output also rises in summer as river flows increase, adding up to 7,000 megawatts of capacity and helping meet ​higher electricity demand from air-conditioning.