More than a helping hand: Iran offers to provide 10,000MW

[Omar1984]

Neighbouring country also proposes to set up a refinery and provide oil on long-term deferred payment.


ISLAMABAD: At a time when Pakistan is facing resistance from the US in going ahead with the Iran-Pakistan gas pipeline project, Iran has proposed an electricity supply project which will provide 10,000 megawatts in the second year of its operation.

The quantity is more than the production of independent power producers in the country and almost half the country’s total production capacity.

Under an extensive package to resolve the energy crisis, Iran has also offered to build an oil pipeline and set up a refinery at Gwadar Port to provide oil on long-term deferred payment.

The country’s power production ranges between 5,000 megawatts and 14,800 megawatts against total installed capacity of 20,800MW. Internationally, 80 per cent power can be generated from the total installed capacity but Pakistan’s generation capability stands at 65 per cent due to inadequate upgrading of plants, poor maintenance and circular debt.

Under a plan submitted to the government, Iran will provide 1,000MW of electricity in the first year of the programme and increase it nine-fold to 10,000MW in the second year, sources said.

Iran made the offer during President Asif Ali Zardari’s visit to Tehran on July 15. During the tour, Interior Minister Rehman Malik and Petroleum Minister Dr Asim Hussain also accompanied the president.

Asim Hussain confirmed to The Express Tribune that Iran had made the offer for export of 10,000MW of electricity.

Iran exported 3,940 gigawatt hours of electricity to its neighbours in the first half of the Iranian calendar year, according to Iranian broadcaster IRIB.

Iran’s electricity network is integrated into power grids of seven neighbouring countries including Afghanistan, Pakistan, Iraq, Turkey, Armenia, Azerbaijan and Turkmenistan.

Feasibility study on 1,000MW project completed

Pakistan has already started work on another project costing $500 million, which will import 1,000MW from Iran.

An official of the Ministry of Water and Power said that the feasibility study on import of 1,000MW from Iran through Zahidan to Quetta had been completed. Iran has already started laying a transmission line at Pak-Iran border.

To expedite the process, Pakistan has offered the company laying the transmission line on the other side of the border to build it on this side as well to avoid delay caused by the bidding process, the official added.

Pakistan is currently importing 35MW of power from Iran to meet requirements of Gwadar while work on increasing it by 100MW is in process. The two sides signed an agreement on this project in 2007 which is expected to become operational next year.

Pakistan also has another project in the pipeline to import 1,000MW of electricity from Tajikistan. Feasibility report has been finalised on this project, while work is expected to be completed by 2016.

Moreover, India has also offered Pakistan to export electricity and a working group has been formed to undertake the assignment following commerce secretary-level talks held between the two countries in April.

Currently, independent power producers generate most of the electricity in the country by producing 7,600MW, followed by 5,000MW by Wapda and 2,000MW by power generation companies.

Published in The Express Tribune, October 25th, 2011


More than a helping hand: Iran offers to provide 10,000MW – The Express Tribune

 

[apophenia]

It sounds a bit unrealistic. Our current power dilemma is directly related to circular debt rather than production capacity, and unless we formalize a mechanism to reduce the impending circular debt. Any new venture will only bring more financial burden to the masses.

 

[ice_man]

another big contract in which everyone gets kick backs! we rather spend money on building dams and wind farms! or solar electrcity panels!

 

[bc040400065]

thank you Iran, but we don't need it, we have the capacity and resources, only thing missing is honest leadership. Also the problem here is corruption and not power shortage.

 

[Stumper]

thank you Iran, but we don't need it, we have the capacity and resources, only thing missing is honest leadership. Also the problem here is corruption and not power shortage.

Sir, with due respect, you DO need it. And its beyond circular debt now. You do realize that your current capacity does not suffice existing demands. And the projects in pipeline are also not on schedule (Not to mention that even this projects will not suffice the future demand). If you do not import electricity now, it will have a cyclic effect of shutting down your industries, economic slowdown, inflation and eventual default of electricity payments. So Power Shortage really IS a problem.

In my opinion, this import of electricity is a good option , provided IRAN offers some favorable pricing agreement.

 

[longbrained]

It will never be done for a simple reason. Iranian corporations are government controlled and hard bargainers who will never pay the 10% commission. Without this percentage no deal will ever be done.

 

[lem34]

I for one appreciate the gesture of our Iranians brothers. They are our neighbours. we must build bridges and work in harmony in our region.

 

[Hyde]

we need . we need .. we need ...

but please give us for free as i am afraid we may not be able to pay the money back to you

 

[Don Jaguar]

A friend in need is a friend indeed!!!

 

[longbrained]

It sounds a bit unrealistic. Our current power dilemma is directly related to circular debt rather than production capacity, and unless we formalize a mechanism to reduce the impending circular debt. Any new venture will only bring more financial burden to the masses.

True but it is now beyond circular debt. Circular debt is now just the tip of the iceberg. Story goes like this:

Since 1980's some political considerations as well as other reasons such as environmental, financial as well as technical prevented construction of dams in Pakistan. Total capacity of Pakistan for hydro-electricity of an economical cost, is estimated at around 50,000 MW. Some of these dams will never be built because of environmental, political or other reasons. Construction of other dams which can be built needs very large amount of initial capital since dams have a very higher initial cost than other kinds of power plants. Such amounts of money has always been difficult for Pakistani government to cough up and had to be financed by foreign governments or international banks.
Among these financing entities many will not finance certain projects because to their own interests such as Basha dam. While World Bank is ready to finance KalaBagh dam, there are political reasons that this dam will never be built, but world bank knowing this well is pushing for this dam. World Bank is against Basha dam and reasons that it is because of Indian reservations about Basha project. The project costs upward of 16 billion dollars. Now Pakistan does not have local funding for it and international banks are not ready pay when world bank says no. Only US has offered to pay only 1 billion dollar loan for it just about 6% of the total funding if Pakistan does more in fight against terror. Then there are technical considerations for example a nation can not only depend on hydroelectricity since there might be drought years and loss of a major portion of energy production. A stable grid needs multiple sources so that loss of one source does not cause disruption.

Then there is IPP and circular debt. In 1990's government decided to diversify energy sources and at the time oil prices were under 10 dollars a barrel. Besides a new model of electricity generation and distribution in US had emerged in which small privately run power generation and distribution companies would take over the market and run it. California was one of the first states to implement this model which later on failed miserably to the point that there were black outs in California in 2000's. But at that time, ofcourse it was a popular modern model and Pakistan imported this model and viewed it as next generation model for efficient and cheap power production. So IPP's were formed and these companies were guaranteed oil supply at the rates of the markets of 1990's and a guaranteed tariff for their produced electricity. Since oil fired power plants are cheap to built, many were built in a short time doubling Pakistan's electricity generation capacity of Pakistan in a short period. But then happened 9/11 and prices of oil shot up. Government initially thought it was temporary and 1990's will come back so they kept guaranteeing debt to provide oil to IPP's via PSO using instruments of sovereign debt or deffered oil payments from Saudi Arabia, Kuwait and Iran, until it could do no more. The debt had grown to a gigantic size and 1990's was not coming back. So they stopped paying for the debt, PSO could not import any more oil, IPP's were not getting the oil. So they shot down. Now there are two ways, increase the electricity price so much so that it becomes possible to run IPP's and pay the gigantic debt by devaluing ruppee or just forget about IPP's and the debt, dissolve the agreement with IPP freeing them and government from their obligations and source electricity from some other source.

This is the real problem as of now. It is not circular debt. It is decision by Pakistan government to either choose to keep the IPP model or just go with some other source and till date after several years, still no decision has been made. One day gov. says we are going to devalue the rupee and solve the problem, the next day they say we are going to build new dams, coal and gas power plants and still the other day they say Pakistan does not have the initial capital for local projects and international funding is hard to come by in this poor global economic conditions so we will have to import electricity from China and Iran.

Meanwhile people are suffering. In summer they suffer because of electricity shortage and in winter because of gas shortage. The only good thing gov. has done is floating petrol prices otherwise if they had tried to control prices of petrol there would have been petrol shortages as well. The best and the quickest way to solve electricity problem is to go and import electricity since we would just need build a few transmission lines. Many countries import electricity, Spain and Germany import from France and Turkey imports from Iran. The important thing is to have electricity so that economy can flourish. Many countries also choose to import because this way they can stop building power plants and use the funding for building the power plants to start other industries. Pakistan can do the same using what little money it has to develop a few large scale copper and iron mining projects so that Pakistan can start exporting steel and copper and make economic progress.

 

[AZADPAKISTAN2009]

This offer should be taken , if with Electricity we can boost GDP 4000% , then its a sound investment and we pay iran 1% of the GDP we would get from commerce, electric trains and other revenue

SHOULD BE TAKEN !!!

This is like Pakistan instantly making 200% more capacity

99% of productivity will be going up and people will work to make money

Ideally This electricity should be given to our Industrial sector , and Dams should be used for cities

This is no brainer

Look at it , we will build a Dam with 10 Billion dollar , on Loan form IMF or World Bank
that will be paid off , and we will be giving millions away yearly in interest and for 3-5 years there is no solution

The Electrical Energy from Iran will arrive in 1 year time

Cost May be 0.5 Billion , to setup , and instantly our Energy crisis will end

All the Industries will work with 80 hours of continuous electrical supply

10,000 MW is enough energy that we could even run our Trains fully on Electricity !!!

No need for Fuel for Trains
No need for businesses to close down
No need for Textile industry to shut down
Electricity enough to run all Shadi halls
Textiles Miles all functioning
Industry all producing
Students all studying with AC
Universities getting proper electricity

All by paying , 1-3% of what benefits will come to Pakistan , after 4000% increase in GDP in nation

 

[longbrained]

The summer is again coming and the massive load shedding with 55 degree heat is on its way. I wonder why the government does not give this a go ahead to atleast give some relief to the people in a fast way.

 

[Omar1984]

Iran seeks tenfold electricity exports to Pakistan

Iran and Pakistan started new round of talks on boosting Iranian electricity exports to the neighboring country by over 10 folds to reach 4,000 megawatts (MW) per day.

Currently, Iran exports some 35MW of electricity to Pakistan on the daily basis, according to Mehr news agency.

Iran’s Energy Minister Majid Namjou said that by the next three years, the country will increase the electricity exports to Pakistan by 1,000 megawatts and that Iran was working on a new power grid in order to deliver electricity to Pakistan.

Deputy Energy Minister Mohammad Behzad has said that electricity exports to Pakistan will increase step by step.

Behzad announced that Iran’s power grid will soon be connected to those of the Persian Gulf littoral states.

The Iranian deputy energy minister also said that Iran’s power exports are expected to reach a mark of $1billion in the current Iranian year which started on March 21.

Iran’s electricity network is connected into the power grids of seven neighboring countries, including Afghanistan, Pakistan, Iraq, Turkey, Armenia, Azerbaijan and Turkmenistan.

Iran seeks tenfold electricity exports to Pakistan - Tehran Times

 

[Anish1]

Pakistan should build conventional power plants why all this solar dam wind stuff?
They are more expensive to set up and less reliable.
Coal is the way ahead. Nuclear next best option if not used for making nukes all the time.
India is adding more than 16000MW of nuclear energy over next 3 years to existing nuclear capacity of 5000MW.

 

[longbrained]

Pakistan should build conventional power plants why all this solar dam wind stuff?
They are more expensive to set up and less reliable.
Coal is the way ahead. Nuclear next best option if not used for making nukes all the time.
India is adding more than 16000MW of nuclear energy over next 3 years to existing nuclear capacity of 5000MW.

Conventional power plants do not come cheap either. Any modern coal or natural gas power plant would cost upward of a billion dollars per each 1,000 MW capacity. In Pakistan the cost might go up even further due to the security situation and the premium on insurance and security costs for foreign companies coming to install them. Pakistan's shortage is hitting almost 10,000 MW and for that we need at least 15,000 MW of installed capacity. That comes to over 15 billion dollars if we go down the road with conventional power plants. If we build dams, it will be even more expensive to build such a capacity. Basha dam which is currently proposed has a capacity of over 4,400 MW and its cost estimated at 12.5 billion dollars. Additionally Pakistan is banned from getting modern nuclear power plants and is not in the same boat as India which gets nuclear reactors from US. Not only that but nuclear power plants are expensive to build and any modern nuclear reactor with a capacity of 1,000 MW would cost more than 5 billion dollars.

Pakistan's power requirement is growing at the rate of 9% per year which is huge. The problem is initial capital money to build plants and the time scale it takes to build such a large number of big plants which would take at least 10-15 years. That is why it is better to import electricity for the moment so that our economy and people do not suffer in this and the next decade until these plants are built. Lots of countries import their power for example Turkey or a lot of EU countries instead of letting their economy and people suffer.