No Privilege for Belgian Power Company

No Privilege for Belgian Power CompanyNo Privilege for Belgian Power Company

Iran has not granted any privilege to a Belgian company that intends to construct power plants in Iran under a $6 billion contract, deputy energy minister said on Saturday.

"A major European company has expressed its readiness to invest in Iran's power industry, building both combined-cycle and wind power plants," Houshang Falahatian was quoted as saying by Fars News Agency.

Falahatian did not name the Belgian company.

A combined-cycle plant is an assembly of heat engines that work in tandem from the same source of heat, converting it into mechanical energy, which in turn usually drives electrical generators.

Asked whether the Energy Ministry has already finalized the contract without holding a tender, Falahatian ruled out any such arrangement and stressed the ministry works with contractors only under the build-operate-transfer or build-own-operate methods.

"We have received permission from the Economic Council that allows for signing a contract with foreign firms on building combined-cycle unit(s)," he said.

The permission stipulates that the ministry must guarantee the purchase of electricity generated from such plants under a five-year contract from the day the power plant becomes operational, after which the plant's output will be sold in the power market or in the Energy Bourse.

"According to the plan, the Belgian company would raise Iran's power production capacity by 3,520 megawatts from combined-cycle units, which will operate with 58% efficiency, 10% higher than the most efficient plants built by domestic contractors," he said.

Iran plans to produce 5,000 MW of electricity from renewable energy sources by 2018. The country's electricity industry ranks 14th in the world and first in the Middle East in terms of electricity generation with an installed power production capacity of 74,000 MW.

Plans call for increasing the capacity by 5,000 MW annually over the next 10 years, raising the total installed power capacity to more than 120,000 MW by 2025.

Falahatian noted that the two sides have not signed the contract yet, but expressed optimism it will do so in two or three weeks. He also announced that the contract on building wind power plants has yet to be discussed in the Economic Council.

According to reports, four combined-cycle units will be constructed in the cities of Mianeh, Aras, Tabriz and Zahedan, and at least two wind plants will go on stream in Ahar and Sarab cities.