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US sanctions: Pakistan links 100MW import from Iran with payment mechanism

By Khalid Mustafa
March 20, 2019

ISLAMABAD: Pakistan has linked the import of additional 100MW of electricity from Iran with carving out of payment mechanism in the presence of the US sanctions imposed on Tehran.

To this effect, Pakistan has raised some questions seeking answers from Iranian side for making the payment mechanism against additional import of 100MW of electricity. Under the proposed plan, from Polan – a place at the Pakistan-Iran border from where the electricity transmission line will be laid down up to Gwadar for transmitting the additional 100MW of electricity. Both the countries have already signed MoU for import of 100MW electricity.

“We are already importing 104MW electricity at 7-8 cents per unit and against this import Pakistan needs to pay $121 million and to this effect Pakistan will pay in Pak rupee to Iran,” a senior official of Power Division told The News.

An Iranian delegation led by Chairman of Board & Managing Director, TANAVIR, Muhammad Hassan Motevallizadeh held two-day talks with top mandarins of National Transmission Dispatch Company and Central Power Purchase Agency (CPPA) and underscored for more import of 100MW electricity from Iran. The Iranian delegation also met top men of Power Division--- Federal Minister for Power Omar Ayub Khan and Secretary Power Division Irfan Ali on March 4.

The official who remained part of the two-day talks with Iranian team said that Pakistan asked Iran to first carve out the payment mechanism and then advance on building the infrastructure of transmission line for importing more 100MW electricity and to this effect,

Pakistan has submitted its input and now Iranian side would come up with its response. “Once the payment mechanism is finalized, the working on establishing the transmission line will kick off.”

Currently Pakistan is importing 104MW power from Iran knowing the fact that the tariff agreement was expired in December, 2016, but TANANIR remained steadfast for supplying uninterrupted power supply to Pakistan. CPPA will, the official said, submit a petition with Nepra seeking new tariff for existing import of 104MW.

In 2002, Pakistan and Iran entered into an agreement for supply of electricity 34MW which was further increased by 30MW. Then another 30MW of electricity is inducted in the national grid in 2016 jacking the electricity import to 104MW.

It is pertinent to mention that Iran had already extended offer of exporting electricity of 3000MW to Pakistan. However, Pakistan had shown interest for power purchase agreement (PPA) for import of 1000MW of electricity, but since then, no progress was made on this front.

To this effect, the feasibility study was conducted jointly by MOSHANIR (Iran) and NESPAK (Pakistan) for import of 1000MW and its report was submitted on April 26, 2010. Both the parties had agreed to construct HVDC interconnection on 500kV level with Converter and Switching stations at Zahedan and Quetta.

Total length of the transmission line would be around 678km out of which, 93km would be constructed in Iran and 585km will be constructed in Pakistan. Iran will construct dedicated 1300MW power plant at Zahedan for supply of 1000MW to Pakistan. The total estimated cost of transmission line project will be $700 million. According to NTDC, the Iran has agreed to finance 70 percent of the cost of transmission line to be constructed in Pakistan side whereas 30 percent will be met through NTDC' own sources.