Import of 1100MW electricity: funding issue may be raised with Iranian President

Pakistan is likely to raise the issue of financing of 1100 MW electricity with the Iranian President Hassan Rouhani who is scheduled to visit Pakistan during the last week of the current month.
Official sources told Business Recorder that Pakistan is already importing 74 MW electricity from Iran to meet Gwadar requirements and agreement for import of a further 100 MW was signed but its execution delayed due to sanctions on Iran. As per the agreement signed between the two countries, Iran has to extend financing of 100 MW electricity import project.
This would be the first visit of the Iranian President to Pakistan after lifting of international sanctions; and follows the recent visit of Prime Minister Nawaz Sharif and Army Chief General Raheel Sharif to Saudi Arabia.
"We will push the Iranian President to provide funding for the project as sanctions have been lifted," the sources continued.
Pakistan is also seeking financing for 1000 MW electricity import project. Nepra has already approved tariff for the import of electricity from Iran. The cost of HEDC line of 1000 MW will be different from transmission lines of 100 MW and 74 MW.
"70 per cent financing of 100 MW and 1000 MW electricity import projects has to be arranged by Iran, whereas Pakistan's component share will be 30 per cent. We are requesting Iran to provide its financing component so that Pakistan can complete other formalities," the sources maintained.
The issue of the currency of payment for 74 MW will also come under discussion during the visit of the Iranian President. Previously, Pakistan paid the amount of invoices in Pak rupees and Iran converted it into dollars or whatever currency they wanted.
Now with banking channels are open after lifting of sanctions. As Pakistan receives monthly invoices payments will be made through normal channels.
However, both countries will finalise payment mechanism of outstanding $100 million against supply of 74 MW electricity as all efforts to finalise a barter deal remains unsuccessful.
The Iranian President will also be accompanied by Foreign Minister and other senior officials.
Pakistan, sources said, will also propose Iran to sign Free Trade Agreement (FTA) to enhance bilateral trade by setting aside dysfunctional Preferential Trade Agreement (PTA).
During the visit, MoUs are to be signed in power, petroleum and natural gas sectors and petro-chemical, rail tracks, highways, construction of dams and establishment of oil refineries and power plants.
The two sides will also talk about opening two more points at their shared border, one at Gabd and other at Mund Pashin, for enhancing trade.