Energy import: Iran to supply 1,000MW to Pakistan

Published: December 29, 2013
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A 700-kilometre transmission line of 500 kilovolts will also be laid from the Pakistan-Iran border to Quetta. PHOTO: FILE

A 700-kilometre transmission line of 500 kilovolts will also be laid from the Pakistan-Iran border to Quetta. PHOTO: FILE

ISLAMABAD: 

Pakistan and Iran are set to sign an initial deal for the supply of 1,000 megawatts of electricity to overcome the crippling energy crisis in Pakistan.

Sources told The Express Tribune that the Ministry of Water and Power was calling for the vetting of a draft of memorandum of understanding (MoU) to be signed with Iran for electricity import.

“Pakistan will be paying 8-11 cents per unit of electricity under the formula agreed with Iran,” a source said.

Under the project, Iran will build a powerhouse in its Zahedan province bordering Pakistan to generate electricity for export. Iran has also expressed its willingness to provide a loan of $800-$900 million for the project.

A 700-kilometre transmission line of 500 kilovolts will also be laid from the Pakistan-Iran border to Quetta.

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During the previous government, Iran had also expressed interest in setting up a 200MW power plant in Balochistan. Tehran was also keen on installing smaller plants of 25MW each on the ground as well as on barges to help Pakistan overcome the power crisis.

But all the plans stalled due to the sanctions imposed by the West. Iran had offered to export 10,000MW of electricity during the tenure of the previous government.

According to energy experts, the Iran-Pakistan (IP) gas pipeline project has been facing problems due to sanctions imposed by the United States on Tehran.

“So, it may also be difficult for both countries to press on with the 1,000MW power import project unless US sanctions are lifted,” an expert said, adding Pakistan was already facing problems in clearing dues for 74MW being imported for Gwadar.

“The main issue hampering the implementation of the projects is the delay in clearance of Iran dues,” he said, adding other countries like Turkmenistan and Turkey were also facing payment issues with Iran in gas trade.

Iran owed Turkmenistan $1 billion in December 2012 for gas import and due to difficulties in transfer of funds. On the other side, during the same month, Turkey offered barter trade and payment in gold to Iran for the import of natural gas due to hurdles to cash payments.

Experts said Pakistan would also experience payment transfer issues in gas import through the Iran-Pakistan pipeline and in power import project.

At present, Iran is exporting 74MW of electricity per day to the border areas of Balochistan as well as Gwadar, but Pakistan has not been able to carry out banking transactions with Tehran since June 2011 after the US and European Union intensified sanctions.

Iran has been exporting electricity through a 132-kilovolt transmission line. In 2006, Pakistan was importing 39MW, which was later increased to 74MW.

Earlier, the Iranian firm exporting electricity to Pakistan had threatened to cut supplies because of delay in settling the dues.

Published in The Express Tribune, December 29th, 2013.

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Reader Comments (18)

  • Parvez
    Dec 29, 2013 - 2:05AM

    An MoU……in reality is just that an understanding has been reached . In fact it means very little.

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  • polpot
    Dec 29, 2013 - 3:45AM

    “Energy import: Iran to supply 1,000MW to Pakistan”
    +++++++++++++++++++++++++++++++++++++
    And will there be a penalty clause if for any unforseen reason Pakistan does not purchase the power?

    Recommend

  • polpot
    Dec 29, 2013 - 3:52AM

    “Pakistan will be paying 8-11 cents per unit of electricity under the formula agreed with Iran,” a source said”
    +++++++++++++++++++++++++++++++++++++++++++++++
    10 US cents= 10 PK Rs Approx.
    That is much cheaper than the cost of domestic oil based power generation in Pakistan.
    Also this becomes a benchmark for the MOU for power purchase ex india.
    Btw what is the targeted cost per unit of electricty ex Neelum Jhelum …which has suffered massive cost over runs and delays?

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  • Baji Jee
    Dec 29, 2013 - 4:12AM

    Thank you, Iran :)

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  • polpot
    Dec 29, 2013 - 4:14AM

    “Pakistan will be paying 8-11 cents per unit of electricity under the formula agreed with Iran,”
    +++++++++++++++++++++++++++++++++++++++++++++++++++++++++
    10 US cents= 10 Pk Rs.
    Since this is a benchmark of sorts for all Power Projects in Pakistan let me share the emerging cost of power ex Neelum Jhelum Hydo power project.

    “Neelum Jhelum will be an expensive hydropower project as it will generate electricity at a higher cost of over Rs10 per unit compared to average cost of 16 paisa per unit for hydroelectric power.”
    Source http://tribune.com.pk/story/572143/neelum-jhelum-project-saudi-arabia-clears-way-for-100-million-loan/
    Conclusion: Power Import is both needed in long term and viable in long term the only issue in case of Iran being the threat of US & EU sanctions.
    The sanctions of course do not apply to purchase ex Turkmenistan or India.

    Recommend

  • Hitler
    Dec 29, 2013 - 4:37AM

    Good move. But these arrangements are still going to take a few years to provide the electricity. Government should also look for the ways to minimize the shortage quickly as whats left of our industry will be gone when all these long term projects are completed.

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  • polpot
    Dec 29, 2013 - 4:43AM

    Pakistan will be paying 8-11 cents per unit of electricity under the formula agreed with Iran,”
    ++++++++++++++++++++++++++++++++++++++++++++++++
    10 US Cents= 10 PK rS
    So that forms a basic benchmark for energy projects in Pakistan and I raised the issue of cost targets ex the Karachi based Chinese Nuclear Projects. In this context I draw attention to the Indian expereince: “As per latest calculation the cost of power to be generated from the Jaitapur plant has gone up to InRs.9 ( =15.30 Pak Rs)per kilowatt hour . Source:http://www.thehindu.com/business/Industry/working-to-reduce-project-cost-areva/article5414855.ece

    Conclusion: While savings on energy thefts and line losses and replacement of expensive oil based power generation with coal based power will bring down energy costs they will be offset by expensive nuclear power and substitution of expensive Neelum Jhelum power against almost free power ex Mangla Tarbela.
    Not much realistic hope for tariff reduction in the years to come for the Pakistani Cnsumer.

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  • A2Z
    Dec 29, 2013 - 8:50AM

    These are US sanctions not UN but our govt and bureaucracy are licking feet of Americans. They are not interested in solving the power crisis.

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  • Baba Ji
    Dec 29, 2013 - 10:10AM

    MoU or what … tell me, should I start my Bhangra or not ?Recommend

  • Atheist_Pakistani
    Dec 29, 2013 - 10:16AM

    Why even bother posting a news on MOU? If someone can say we pay you money and we buy power, ok, sign this MouRecommend

  • Dec 29, 2013 - 10:34AM

    Seeing and experiencing it, is believing it has come into reality. The Iran-Pakistan co-operation will take-off only when Saudia stops coercing our governments and stops coddling he mullahs. Salams

    Recommend

  • Lailomah
    Dec 29, 2013 - 2:33PM

    Pakistan is currently passing through a disastrous and full of crises situation. Energy shortage is one of that. Pakistan is in dire need of fulfilling the energy needs of its people. For that purpose China has contributed two nuclear power plants which has been a part of smear campaign by the international community. China shook hand with Pakistan once again knowing all the facts that energy crisis is the major issue for which it is making Pakistan to over come. Now Iran’s support to Pakistan in exporting energy to Pakistan is also a positive step towards strengthening the bilateral relations between two Islamic states and to open up positive and innovative ways of cooperation in future.

    Recommend

  • Shakil A Khan
    Dec 29, 2013 - 4:56PM

    Why every government in Pakistan speak in future tens?
    Why they never speak what they have done or completed?
    Only to fool people!

    Recommend

  • Dec 29, 2013 - 6:32PM

    Its better deal then buying from enemy India.

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  • polpot
    Dec 29, 2013 - 6:38PM

    there are many a slip between the cup and the lip…..
    ++++++++++++++++++++++++++++++++++++
    Or in this case many a shortcircuit beween the High Volatge and Low voltage…
    so dount count the watts before the eggs are hatched.

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  • unbelievable
    Dec 29, 2013 - 11:14PM

    How much do the transmission lines cost? What are the terms of the “loan” and are there any penalty provisions if either party fails to deliver? Wish author had done a little more legwork.

    Recommend

  • Waseem
    Dec 30, 2013 - 3:02PM

    ET,
    Please stop posting re-cycled news items
    there is not a one line newer in what was reported 3 years earlier on this issue.
    rest assured, these MOU’s will lead no where, except for signed with Thailand for Poultry feed, which will benefit to poultry king of Punjab, you all know who I am talking about !!!

    Recommend

  • rasgullah
    Dec 30, 2013 - 6:06PM

    @A2Z:
    You must have meant in addition to China’s and Saudi Arabia’s?

    Recommend

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