Energy Ministry Targets Domestic, Foreign Investments

Energy Ministry Targets Domestic, Foreign InvestmentsEnergy Ministry Targets Domestic, Foreign Investments

Iran's Energy Ministry has concluded contracts worth $663 million with domestic investors to implement water pipeline projects over two years, a deputy energy minister said on Sunday.

"Serious negotiations are underway with foreign investors, which should yield positive results in the near future," Reza Anjomshoa was quoted as saying by IRNA.

According to the deputy minister, the Energy Ministry has always relied on foreign investors, including the World Bank and Islamic Development Bank, to fund its projects in electricity, water and wastewater sectors.

Noting that Iran's electricity industry enjoys a vast and diverse market that could be revolutionized by new investments, he said incentives will also be granted to support investors.

Pointing to restrictions imposed on the country due to sanctions, Anjomshoa said the government has made efforts to cover the budget deficit by using different strategies not to stop development projects in water and power sectors.

"Iran's water and electricity sectors have the capacity to attract more than $30 billion in foreign and domestic investments," he said. "State-of-the-art technology transfer and attracting foreign investments are among much-needed requirements in the energy sector."

The deputy minister noted that the implementation of Iran's nuclear agreement with the world major powers, officially known as the Joint Comprehensive Plan of Action, will definitely help the ministry introduce its project to foreign investors.

  Investment Projects

According to Anjomshoa, the Energy Ministry has prepared its projects for presentation to foreign investors in various sectors, including power plant construction, potable water network expansion and renewable energy development.

The ministry aims to keep the quality and efficiency of power plants above 58% and has devised a number of programs to optimize output, one of which includes cooperation with with South Korea's electricity giant Electric Power Corporation (KEPCO).

One of the plans topping the ministry's agenda is electricity generation near consumption sources, or what is known as microgeneration, where producers can sell the excess amount of generated electricity. According to energy officials, the country's electricity industry needs an annual investment of $2 billion, which explains why it welcomes foreign direct investment.

Arash Kordi, the head of Iran Power Generation, Distribution and Transmission Company, has announced that talks are underway with KEPCO to implement Iran's energy projects.

The Energy Ministry is also in advanced talks with K-Water, South Korea's government arm for developing and implementing water projects, to introduce new water management projects in Iran.

K-Water's extent of operations encompasses a wide range of projects that local water and wastewater companies and Energy Ministry carry out in Iran. A memorandum of understanding has also been recently signed by Iran’s Energy Ministry and French company Suez S.A. on reducing water wastage by 10%. The MoU calls for a pilot plan in a district of Tehran, covering a population of 1.5 million, to streamline the water network and curb water wastage.

  Electricity Export License

Alireza Daemi, deputy energy minister for planning and economic affairs, said that as per rules and regulations, the Oil Ministry is not allowed to embark on electricity export independently, as obtaining licenses from the Energy Ministry is a must.

According to Daemi, there are certain instructions to export electricity, based on which electricity can be exported by private sector enterprises under special contracts, which explains why the Oil Ministry cannot export electricity autonomously.

"The ultimate goal of electricity export is to boost national interests," he said, adding that electricity export can inflict serious damage on the economy unless domestic export competitions are managed. Underscoring the fact that at present the price of natural gas supplied as feedstock to power plants exporting electricity is as much as exported gas, the official said this issue is not applicable in some cases as electricity export's profits vary in different states. In other words, the rate for exporting electricity to Afghanistan is different from the rate for western states. National interests call for exporting electricity to places that generate more profits.

Iran’s electricity industry ranks 14th in the world and first in the Middle East in terms of electricity generation. It is the largest exporter and importer of electricity in the Middle East and exports electricity to Armenia, Pakistan, Turkey, Iraq and Afghanistan.