Iran, Pakistan reach impasse in power export negotiations

[A.Rafay]

ISLAMABAD:
Pakistan and Iran have entered into a deadlock over the price for export of 1,000 megawatts of electricity as the former has refused to accept the latter’s price link with international crude prices.
Pakistan and Iran have already signed a memorandum of understanding (MoU) for electricity supply. However, Iran has linked the price for export of 1,000 megawatts of electricity with international crude prices with the rate fluctuating in the range of 7 to 11 cents per unit.
“Iran will produce power with gas and therefore its price should be linked with gas, which is a cheaper source of power generation,” a source said, adding that the government of Pakistan is also discouraging power generation through furnace oil and moving towards coal for power generation.
Furthermore, the price of importing electricity will rise after including expenditures on laying the distribution and transmission line. An official of the Ministry of Water and Power said gas prices in Iran were linked with global oil prices, therefore, it based the power price on crude oil prices in the international market.
“The power price offered by Iran is not acceptable to us as we do not want to link the price with crude oil for the power,” a senior government official said.
According to the price formula, Pakistan will be paying a maximum rate of 11 cents per unit of electricity if crude prices reach $110 per barrel and the price range will be reviewed after five years. The electricity price has been capped so that oil rates do not cross the $145 per barrel mark. However, if crude prices rise above that level, the two countries will be bound to review the electricity rate before the end of five-year period.
Under the proposed project, Iran will build a powerhouse in Zahedan province bordering Pakistan to generate electricity for export and has also expressed its willingness to provide $800 to $900 million for the project. A 700km transmission line of 500 kilovolts will also be laid from the Pak-Iran border to Quetta.
Some officials suggest that the government should ask Iran to install the power plant in Pakistan in order to avoid expenditure on laying the distribution and transmission line.
Besides the 1,000MW for which an MoU has been signed, Iran has also offered to export a huge quantity of 10,000MW to Pakistan.
However, the ministry official pointed out that Iran, at present, had no power plants to export such a huge quantity. “So the best way is to press Tehran to establish power plants in Pakistan,” the official said, adding Iran had already shown interest in setting up a 200MW plant in Balochistan near the border.

Thorny issue: Iran, Pakistan reach impasse in power export negotiations – The Express Tribune

Iran also wants to loot us after zardari!

 

[SamranAli]

haha. But Iran should invest in power plants in Pak.

 

[somebozo]

doing business with Iranians means getting ripped off..they are big thieves and manipulators..better to look towards Tajikstan to have a grid connection via Afghanistan. Ayatollahs have no sympathy with Pakistan, they are just in the game to exploit the need of hour. How can a price be linked to crude oil when much of it is produced by gas?? Same is the impasse on Iranian gas, they want the prices to be linked with crude oil?

 

[niaz]

ISLAMABAD:
Pakistan and Iran have entered into a deadlock over the price for export of 1,000 megawatts of electricity as the former has refused to accept the latter’s price link with international crude prices.
Pakistan and Iran have already signed a memorandum of understanding (MoU) for electricity supply. However, Iran has linked the price for export of 1,000 megawatts of electricity with international crude prices with the rate fluctuating in the range of 7 to 11 cents per unit.
“Iran will produce power with gas and therefore its price should be linked with gas, which is a cheaper source of power generation,” a source said, adding that the government of Pakistan is also discouraging power generation through furnace oil and moving towards coal for power generation.
Furthermore, the price of importing electricity will rise after including expenditures on laying the distribution and transmission line. An official of the Ministry of Water and Power said gas prices in Iran were linked with global oil prices, therefore, it based the power price on crude oil prices in the international market.
“The power price offered by Iran is not acceptable to us as we do not want to link the price with crude oil for the power,” a senior government official said.
According to the price formula, Pakistan will be paying a maximum rate of 11 cents per unit of electricity if crude prices reach $110 per barrel and the price range will be reviewed after five years. The electricity price has been capped so that oil rates do not cross the $145 per barrel mark. However, if crude prices rise above that level, the two countries will be bound to review the electricity rate before the end of five-year period.
Under the proposed project, Iran will build a powerhouse in Zahedan province bordering Pakistan to generate electricity for export and has also expressed its willingness to provide $800 to $900 million for the project. A 700km transmission line of 500 kilovolts will also be laid from the Pak-Iran border to Quetta.
Some officials suggest that the government should ask Iran to install the power plant in Pakistan in order to avoid expenditure on laying the distribution and transmission line.
Besides the 1,000MW for which an MoU has been signed, Iran has also offered to export a huge quantity of 10,000MW to Pakistan.
However, the ministry official pointed out that Iran, at present, had no power plants to export such a huge quantity. “So the best way is to press Tehran to establish power plants in Pakistan,” the official said, adding Iran had already shown interest in setting up a 200MW plant in Balochistan near the border.

Thorny issue: Iran, Pakistan reach impasse in power export negotiations – The Express Tribune

Iran also wants to loot us after zardari!

Electricity is a commodity like any other. It is traded on New York Mercantile Exchange. Latest known price (Nymex has been shut for last 2 days on account Sandy super storm) is $32.95 per megawatt hour basis mid-Columbia and $30.25 basis Houston.

Most of the electricity generating plants in the world are either coal or fuel oil powered. (Fuel oil is called furnace oil in Pakistan). About 15 years ago working as Consultant for the Jamaica Power, I did a survey of Florida power plants. As a rough estimate, one can say that about 40% cost of power generation is directly related to the fuel. Rest is a combination of manpower cost and plant depreciation and maintenance.

Due to increased Frac- gas production in the US, price of gas on the Nymex is far too low and not really representative of gas price anywhere else. Natural gas price in our agreement with Iran pertaining to the IPI gas pipeline project is also related to the Dubai crude price. On this basis it is quite logical for a seller to link electric power price to international oil prices.

In any commercial transaction, price is a matter of negotiation and if you don’t agree, the deal is off. Iranians don’t want to loot us; Iran simply want best price for her national asset.

Don’t know why Pakistani public thinks that the world has an obligation to subsidize their economy. Even the Supreme Court makes idiotic judgement that CNG should not be linked to international prices. True cost of a usable asset is its replacement cost. This moronic decision by the Supreme Court implies that CJ and his colleagues have become responsible for squandering Pakistan’s national asset.

As a nation we have become used to hand outs. Unfortunately the real world is different. You don’t want to pay the price that the seller wants; you go on suffering 18 hours black outs. It is as simple as that.