Iran may convert power receivable into loan to support Pakistan

LAHORE: Pakistan and Iran are in talks for converting latter's power receivable into loan for expanding/improving former's electricity import arrangements in the coastal areas of Balochistan province, The News has learnt.

During the negotiations held in Tehran in the first week of January, both parties expressed resolve to implement the project and had detailed deliberations to revive the respective Contract Agreement and allied Financing Agreement.

National Transmission and Despacth Company Limited (NTDC) and Iran's Power & Water Equipment and Services Export Company (SUNIR) have come to an agreement on Draft Amendment-2 to the Contract Agreement covering all technical and other issues based on the alternate financing arrangement proposed by Iran's Power Generation and Distribution Company, known as TAVANIR.

Pakistan used to pay price of imported power through barter system due to sanctions imposed on Iran. However, now both countries have entered into advance level talks to convert about Rs5 billion worth of payables into loan.

The text of the draft Amendment-2 has been agreed in principle by both parties to be signed after having finalised the amendments in the Financing Agreement between NTDC and Export Development Bank of Iran (EDBI) including the counter parties i.e. TAVANIR and Pakistan's Central Power Purchasing Agency (CPPAG), to use TAVANIR receivables from CPPAG as a loan extended by EDBI to NTDC.

In the draft Amendment, completion period is locked at 18 months (previously 22 months) and price is fixed at 36,421,000 euros (previously 30.1 million euros, a 21 percent increase on 2009 price) with exclusion of escalation clauses.

Further, TAVANIR assured Pakistani side it would endeavor and do its best to hold necessary meetings with EDBI to resolve any barriers, obstacles, and ambiguities and develop the details of the Finance Model, formerly presented through TAVANIR letter No.11/3178 dated 20th of October 2020, was further agreed in principal by NTDC.

It was agreed the detailed finance model would be presented to NTDC by early in February 2022. From Pakistan side, Muhammad Masood Anjum, Manager Finance NTDCL, and from Iranian side, Vahid Gohari, Director General for Foreign Trade of Electricity, were nominated to act as the focal persons for fast communication and coordination in this regards.

Moreover, M/s TAVANIR promised to provide consistent power supply to Pakistan in summer -at least 70 MW to power coastal areas of Balochistan. Further, more minutes of meeting dated January 5, 2022 were agreed and signed between two delegations covering CPPAG issues of seventh amendment and other agenda items regarding coastal villages electrification through Pakistan-Iran interconnection and possibility of 1000 MW import of power from Iran to Pakistan.

Both sides were flexible to hold any meeting required to fulfill the aforementioned schedule either in Pakistan or in Iran, virtual or in person.

Negotiations were held in pursuance of the 20th Session of Pakistan-Iran Joint Economic Commission on the request of TAVANIR. Subsequently, a high-ranking delegation visited the offices of TAVANIR and SUNIR in Tehran, Iran during December 31, 2021 to January 5, 2022 to finalise and revalidate the respective Contract Agreement and allied Financing Agreement to resolve the outstanding issues of 220 kV Polan-Gwadar Transmission Line Project to supply 100 MW Power to Gwadar from Iran.

Iranian side was led by Arash Kordi, Chairman of the Board and Managing Director of TAVANIR, along with his team representing TAVANIR, SUNIR, EDBI, Ministry of Energy, Iran.

Pakistani side was represented by Ahmed Taimoor Nasir, Joint Secretary, Ministry of Energy (Power Division) along with officials from NTDC and CPPAG, while the NTDC team was headed by Manzoor Ahmad, Managing Director, along with Muhammad Waseem Younas, GM (PSP), and Muhammad Masood Anjum, Manager Finance.