ISLAMABAD: Pakistan and Iran are all set to hold negotiations to extend electricity sale agreement which is to expire on December 31, 2024, well-informed sources told Business Recorder.
Currently Pakistan imports 100 MW electricity from Iran for bordering areas of Balochistan, payments of which are made through informal channels or under barter trade agreement between the two countries. Import is in the range of 18 million units per annum.
Currently, the price of Iranian electricity being supplied to bordering areas of Balochistan is over Rs 27 per unit, which is substantially higher than the electricity generated from imported coal and RLNG.
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Recently, Iranian embassy sent about two dozen remittance and invoice items to CPPA-G for clearance of pending dues against imported electricity.
According to Iran embassy, Islamabad, the electricity sales contract between Iran Power Generation Transmission and Distribution Management Company (Tavanir) and Central Pakistan Power Purchase Agency-Guaranteed (CPPA-G) will expire on December 31, 2024. Accordingly, Tavanir has emphasized the urgent need to hold a joint meeting to extend the contract.
The sources said the Ministry of Foreign Affairs, has forwarded the letter of Iranian embassy to CPPA-G and National Transmission and Despatch Company (NTDC).
Chairman of Tavanir, Mostafa Rajabi Mashhadi, in a letter to Chief Executive Officer (CEO), CPPA-G, Rihan Akhtar, referred to previous correspondences, including the letter of October 1, 2024 in which Tavanir had expressed its readiness to conclude new amendment number 10 to renew the contract of November 6, 2002 on electricity sale between Tavanir and CPPA-G, which has been shared with CPPA-G but unfortunately despite holding one virtual joint meeting between the parties, the two sides have not been able to finalize the new amendment yet.
“Obviously, the validity of bilateral existing contract for electricity delivery to Pakistan is going to expire on December 31, 2024 and its necessary to organize additional joint meetings to secure a timely contract renewal,” Mashhadi added.
However on December 13, 2024, CEO CPPA-G, Rihan Akhtar, in a letter to Mostafa Rajabi Mashhadi, referred to letters of October 1, 2024 and December 8, 2024 titled “urgency of finalizing amendment number 10 and telephonic discussion with the focal person of Tavanir, Mehrdad Eghlimi,” proposed that the Iranian delegation visit Pakistan from December 23-26, 2024 for the finalization of the Amendment 10 for renewal of contract of November 6, 2024 on the sale of electricity between Tavanir and CPPA-G.
Pakistan committed to expedite the payment of the outstanding receivables regarding Iran electricity export to Pakistan and set up a mechanism for monthly payment of electricity purchase. However, the issue of payment has always been a bone of contention between Tavanir and CPPA-G.
In 2022, Iran sent a Memorandum of Understanding (MoU) for sale of 5000 MW to Pakistan. However, this has not been translated into an agreement.
Copyright Business Recorder, 2024