ISLAMABAD: With plans of importing 100 megawatts of electricity for Gwadar in advanced stages, Pakistani banks are reluctant to open letters of credit to Iranian banks owing to sanctions imposed by the West.
Informed sources told Dawn on Thursday that Islamabad has asked Tehran to consider alternate options including bartering commodity exports. “Export Development Bank of Iran (EDBI) and M/S Sunir have been informed that banks are reluctant to open letters of credit in favour of Iranian banks owing to sanctions by the West, therefore they may also consider alternatives,” an official communication said.
The two sides have already signed agreements for the import of 100MW of electricity for Gwadar at the rate of about Rs7 per unit and hope to deliver about 35 MW in Makran in couple of months. The two sides are also negotiating another contract for the import of another 1,000MW, expected to start power supply in about two years.
Under the Rs3.7 billion project, about 75 kilometre of transmission line has to be laid to deliver 100MW of Iranian electricity to Gwadar and adjacent areas of Balochistan. Under the project approved by the federal government in 2007, a contract agreement between M/S Sunir of Iran and National Transmission and Despatch Company (NTDC) was signed in February 2009 for the construction of transmission line and grid stations at Gwadar.
The loan agreement with EDBI was first initiated in April 2009 and finalised in February 2010. The negotiated loan agreement is yet to be vetted by ministries of finance and law from Pakistan and also by EDBI.
On 1,000MW import from Iran, the sources said the two sides were yet to finalise a contract for laying transmission line and interconnection. Under the Rs74 million contract already signed, Pakistan’s Nespak Engineering and Mushanir Power of Iran would determine the technical and economical viability of proposed electrical interconnection between Pakistan’s NTDC and Iran’s TAVANIR.
The joint study shall rank techno-economic merits and cover preliminary cost estimates and operational regimes. The contract between Iran’s Mushanir and Pakistan’s Nespak was signed in 2009 at a cost of Rs427 million and 400,000 Canadian dollars.
The joint venture has completed reconnaissance survey of the line route in Pakistan. The final route survey and investigation report was submitted by Nespak last week. In order to finalise the design and feasibility study, final comments from TAVANIR are still awaited.
Initial estimates suggest the Iranian portion of the transmission line (Zahidan-Mirjaveh on Iranian border) and switching stations in Zahedan would cost $254 million. The transmission line and other facilities in Pakistan from Taftan to Quetta section would cost another $440 million, taking the total project cost at $694 million.
Once the comments are available from Iran, the two sides would activate the functions of a joint steering committee to take the project into implementation phase that would involve engagement of project consultants, arrangements for financing and tariff negotiations.