Call for Private Sector Role in Power Generation

Call for Private Sector Role in Power Generation
Call for Private Sector Role in Power Generation

The government wants the private sector to play a bigger role in the development of power plants, managing director of Iran Power Development Co. (IPDC) said, Moj news agency reported.

"The government's main goal is to allow the private sector to build power plants," Majid Salehi said. "To this end, more than 30 construction permits for power plants have been allocated to private companies and the economic council of the parliament has approved laws allowing the government to purchase power generated by the said companies."

Salehi stressed that the prolonged process of obtaining construction permits, and more importantly, lack of funding from the National Development Fund of Iran (NDFI) are the major problems the private sector is grappling with.

"The longer it takes to allocate funds, the more delay power plants will face to come on stream," he said, underlining time and resources as the two major factors in building power plants. The shortest construction period of a power plant by the Iran Power Plant Projects Management Company (MAPNA) was 14 months. A combined cycle plant approximately takes 220 million euro to build, which the NDFI has expressed readiness to allocate. The Central Bank of Iran (CBI) and other banks should facilitate loans for building power plants, the official said.

Close to $3 billion is allocated to develop power plants in the national budget for the present Iranian calendar year (ending March 2015). Of that amount, $1.1 billion is expected to be provided via selling participatory bonds (fixed income, fixed price), $375 million via bank loans and $752 million from financial resources of Iran Power Generation and Transmission Company (TAVANIR), although TAVANIR is facing a deficit in managing operating expenses.

Development of large thermal power plants is on IPDC's agenda. IPDC has signed a deal with MAPNA to transfer technical knowledge for building 325-600 megawatt generators and turbines. However, development of such projects depends on allocation of funds.

Thermal power plants with total capacity of 3654 megawatts are to come on stream by next March, out of which, 1620 megawatts are under development by privately-owned plants and 1064 megawatts developed by state-run plants. Another 970 megawatts will be added to the energy grid if the necessary funds are made available.