The high price of gas feedstock used to generate electricity for export does not justify investment in building power plants, the head of the board of directors at Iran’s Electrical Industry Syndicate said on Saturday.
“The price determined by the Oil Ministry for the thermal power plants' gas feedstock is close to that of exported natural gas, which is a high price for power production,” Mehr News Agency also quoted Payam Baqeri as saying.
"One of the reasons behind Iran’s lack of strong presence in regional electricity markets is the disagreement between oil and energy ministries over the price of feedstock delivered to thermal power plants."
According to Baqeri, while Iran’s neighboring countries can be significant markets for its electricity, they are meeting demand from other sources speedily. The official noted that government monopoly is another factor for the low rate of Iran’s power export and said the private sector plays no role.
According to IRNA, over 60% of Iran's power output capacity are generated by the private sector, a figure stipulated to reach 80% under the country's privatization plan.
Efforts are aimed at breathing new life into an aging power industry that is overshadowed by state control over most of the production and supply chains, lack of investment and ballooning debts to power plant operators. "Of Iran’s close to 80,000 megawatts of power production capacity, a meager 1,300-1,400 MW are exported to countries sharing land borders with Iran namely Pakistan, Turkey, Iraq and Afghanistan," Baqeri noted, stressing that Iran is rapidly running out of time for gaining a bigger share in power export markets.
“Iran’s power industry can compete with foreign rivals in manufacturing equipment and providing technical and engineering services, which can further flourish if the administration facilitates export procedures and supports non-oil export,” he said. Baqeri also called for diplomatic measures to ease the transfer of money, opening lines of credit and issuing letters of guarantee.
Experts believe that highly-competitive prices of Chinese and Turkish electricity equipment, lack of internationally well-known brands, regular fluctuations in currency rates that adversely impact exporters as well as financial and banking constraints are among the issues hampering the domestic electricity sector.
Highlighting Iran’s electricity consumption that reached a peak of 55,400 MW in July 2017, Houshang Falahatian, a deputy energy minister said that despite high domestic demand, the country has been able to fulfill all its export commitments to neighboring states during the scorching summer days. According to Falahatian, the country trades electricity with four neighbors on its northwestern and western borders, namely Azerbaijan Republic (including Nakhchivan Autonomous Region), Turkey, Armenia and Iraq.
