ISLAMABAD: Pakistan and Iran have reportedly agreed to extend their electricity sale agreement, setting the price at 7.7 to 11.45 cents per kWh after successful negotiations between the concerned entities of the two countries, well-informed sources told Business Recorder.
The previous electricity sale agreement was between the Central Power Purchasing Agency–Guaranteed (CPPA-G)/NTDC and the Iranian company M/s Tavanir which expired on December 31, 2024. The Prime Minister’s Office had also sought an update regarding the extension of the agreement.
In response, the Iranian embassy sent around two dozen remittance and invoice items to CPPA-G for clearance of pending dues related to imported electricity.
Iran, Pakistan to hold talks to extend power sale agreement
Currently, Pakistan imports 100 MW of electricity from Iran to supply to the bordering areas of Balochistan, with payments made through informal channels or under a barter trade agreement between the two countries.
The import amounts to approximately 18 million units per year. At present, the price of Iranian electricity supplied to Balochistan’s border areas exceeds Rs 27 per unit, which is significantly higher than the cost of electricity generated from imported coal and RLNG.
Sources mentioned that a delegation from Tavanir, Iran, visited Islamabad on December 25, 2024, and meetings were held on December 26-27, 2024, at the CPPA-G office to finalize the terms of Amendment No. 10. A record note summarizing the discussions and agreements made under Amendment No. 10 has been shared with the Prime Minister’s Office.
According to the sources, with regard to the minimum take-or-pay clause, it has been agreed that the buyer will take or pay Rs 30 million on all interconnection lines.
Regarding the determination of the electricity price, multiple proposals were discussed. Ultimately, the following mechanism was agreed upon:
R = 3.2 + 0.075xP, where R represents the electric energy price payable in US cents per kWh, and 3.2 is the fixed portion of the delivered electricity cost. P is the monthly average price of a barrel of crude oil from the OPEC basket, in US dollars (ranging from $60.00 to $110.00), as published on the OPEC website (www.opec.org).
Despite the formula, the delivered electricity price will remain within the range of 7.7 to 11.45 cents per kWh.
The line loss-sharing mechanisms for both interconnection lines, agreed on August 9, 2023, for the Polan-Jiwani interconnection line and on June 25, 2024, for the Pishin-Mand interconnection line, have also been incorporated into the contract through Amendment No. 10.
Both parties agreed to inform the relevant authorities about the agreed terms before proceeding with the execution of Amendment No. 10.
Prior to the negotiations, the Chairman of Tavanir, Mostafa Rajabi Mashhadi, in a letter to the CEO of CPPA-G, Rihan Akhtar, referred to previous correspondence, including the letter dated October 1, 2024, in which Tavanir expressed its readiness to conclude Amendment No. 10 to renew the November 6, 2002 contract on the sale of electricity between Tavanir and CPPA-G.
Copyright Business Recorder, 2025
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