Electricity supply: Iran links power price with world crude rates

Published: July 11, 2012

The government should ask Iran to install the power plant in Pakistan in order to avoid expenditure on laying the distribution and transmission line. PHOTO: FILE

ISLAMABAD: Iran has linked the price for export of 1,000 megawatts of electricity with international crude prices and the rate will fluctuate in the range of 7 to 11 cents per unit.

Pakistan and Iran have already signed a memorandum of understanding (MoU) for electricity supply. According to a government official, the two sides have also agreed on the price which will be in the range of 7 to 11 cents per unit.

An official of the Ministry of Water and Power said gas prices in Iran were linked with global oil rates, therefore, it based the power price on crude oil prices in the international market.

According to the price formula, Pakistan will be paying a maximum rate of 11 cents per unit of electricity if crude prices reach $110 per barrel and the price range will be reviewed after five years.

“The electricity price has been capped by the time oil rates do not cross the $145 per barrel mark. However, if crude prices rise above that level, the two countries will be bound to review the electricity rate before the end of five-year period,” the ministry official said.

Under the proposed project, Iran will build a powerhouse in Zahedan province bordering Pakistan to generate electricity for export and has also expressed its willingness to provide $800 to $900 million for the project. A 700km transmission line of 500 kilovolts will also be laid from the Pak-Iran border to Quetta.

Some officials suggest that the government should ask Iran to install the power plant in Pakistan in order to avoid expenditure on laying the distribution and transmission line.

Besides the 1,000MW for which an MoU has been signed, Iran has also offered to export a huge quantity of 10,000MW to Pakistan.

However, the ministry official pointed out that Iran, at present, had no power plants to export such a huge quantity. “So the best way is to press Tehran to establish power plants in Pakistan,” the official said, adding Iran had already shown interest in setting up a 200MW plant in Balochistan near the border.

To push ahead with talks on electricity supply, a four-member delegation of Iran’s Mapna group of companies, headed by Abbas Ali Abadi, held a meeting with Federal Water and Power Minister Chaudhry Ahmed Mukhtar at the ministry on Monday.

The delegation expressed great interest in the power sector and discussed the setting up of plants of 1,000MW capacity immediately. The Iranians were also keen on installing smaller plants of 25MW on the ground as well as on barges to help Pakistan overcome the prevailing power crisis.

Published in The Express Tribune, July 11th, 2012.

Reader Comments (10)

  • Ahmed Khan
    Jul 11, 2012 - 3:57AM

    Why do we not build power plants and dams ourself for God’s sake we are a nation of 200 million people, our engineers are as brilliant as any others in the world , why dont we train them and pay them, are we going to export onions and mangoes for the rest of our lives?

    Recommend

  • Hasan
    Jul 11, 2012 - 5:11AM

    Yes, yes, yes – please, sign whatever is necessary to give this the go-ahead.

    I don’t care if we need to put the Iranian tricolor flag on every government building in Islamabad, the poor people desperately need electricity. Let’s do whatever it takes, for God’s sake.

    Hasan

    Recommend

  • sam
    Jul 11, 2012 - 5:43AM

    incapable leadership.we MUST leave home and VOTE Imran Khan this time. NOW or NEVER

    Recommend

  • amir
    Jul 11, 2012 - 5:55AM

    This protect will make Iran & Pakistan more friend

    Recommend

  • Nadaan Kaarkun
    Jul 11, 2012 - 9:00AM

    @Hasan

    Bro…you have gone a bit over emotional…

    totally agree with the point Ahmed Khan has raised

    Recommend

  • Shyam
    Jul 11, 2012 - 12:03PM

    @amir
    This protect will make Iran & Pakistan more friend

    No, soon you will be blaming Iranian “agents” for problems in Balochistan and burning their flags

    Recommend

  • MA
    Jul 11, 2012 - 1:28PM

    Agreed with Ahmed Khan
    Why do we not build power plants and dams ourself for God’s sake we are a nation of 200 million people, our engineers are as brilliant as any others in the world , why dont we train them and pay them, are we going to export onions and mangoes for the rest of our lives?

    We have all the expertise to explore oil/coal/minerals in Pakistan. we have the best engineers and engineering companies, for example “Descon Engineering” is a local company operating outside Pakistan as well & is now one the famous contractors in Middle east for setting up oil and gas extraction & storage plants. Why cant we utilise our man power and expertise for this country ???????

    Recommend

  • sinbad
    Jul 11, 2012 - 5:29PM

    All countries that have come under the control of the United States have remained poor and undeveloped. Buy Iranian power until you can generate enough of your own and find your own destiny. The coming century is Asia’s century don’t let colonialists steal your future.

    Recommend

  • S
    Jul 11, 2012 - 5:43PM

    Yes we should and we can buidl our own plants, but it is going to take time, in the mean time is good to improve realtions with another Muslim countires. Atleast there will be two Muslim countires then who are not figihting each other.

    May ALLAH help us unite…. :))

    Recommend

  • Ali tanoli
    Jul 11, 2012 - 8:19PM

    Iranians are clever guys dont expect too much its hard to get benefited from persian its my exprienced.Recommend

More in Business