Iran Clarifies Power Plant Deal With Turkey

Iran Clarifies Power Plant Deal With TurkeyIran Clarifies Power Plant Deal With Turkey

Energy Minister Hamid Chitchian on Monday hit back at criticisms over a multibillion dollar deal signed two months ago with Turkish energy company Unit International for building power plants in Iran.

“All objections raised by the media against the contract and the Turkish firm’s reputation are baseless. Unit International built five large high-quality power plants in Iran during the 1980-88 Iran-Iraq war. How can a company build power plants 28 years ago that are currently operational and not have the ability to construct new ones now?” Chitchian was also quoted as saying by ISNA.

Opponents of the plan claim that Unit International’s main field of activity is hotel construction and that it has no experience in the construction of power plants in any country.

However, according to Bloomberg, UNIT International S.A. owns and develops power generation assets in Turkey, Eastern Europe and the Middle East. It engages in engineering, procurement and construction projects for hydroelectric, natural gas, wind and biomass power plants.

On the details of the agreement with the Turkish company, the minister said following lengthy negotiations with several foreign companies, Iran’s power industry sealed its first investment contract after the removal of international sanctions with the Turkish investor.

As per the deal, Unit International is due to build combined-cycle power plants in six regions, which would generate 5,000 megawatts of electricity.

“The power plants will have a considerable efficiency rate of over 58%,” Chitchian said.

The two countries reached the $4.2 billion accord on June 1 in Tehran.

  20,000 MW of Power Deals

“We are now in talks with domestic and foreign investors on the construction of large thermal power plants that will produce close to 30,000 MW,” Chitchian said.

The official underscored that the bulk of negotiations are being carried out with local investors, but Iran is also eying foreign ones.

“After the implementation of the Joint Comprehensive Plan of Action, the pace of negotiations with foreign sides have accelerated as Iran has received proposals put forward by companies from Russia, China, Japan, South Korea, Germany and Italy,” he said.

According to the minister, attraction of investment for building small power plants, renewables and hydroelectric ones is also on the Energy Ministry’s agenda.

“Iran’s total power plant building deals during the incumbent government will reach 20,000 MW by mid-2017,” Chitchian added.

  Decline in Power Plant Building

The energy minister said he accepts the fact that the process of constructing power plants and increasing power generation capacity has slowed down in the past years, but added that it is not due to the Energy Ministry’s performance.

“The issue stems from some negative factors: firstly, low power prices in Iran compared to those in other countries that have made investment less attractive. In addition, many private companies, which had bid for investment, were not financially able to do so, as for the construction of a power plant in Iran, the investor has to provide at least 15% of the project’s costs,” he said.

Chitchian clarified that in the past few years, almost no Iranian bank has funded the private sector’s power plant construction while the National Development Fund of Iran has only financed 780 MW of power plants on average per year.

Iran’s total power production capacity currently stands at 75,000 MW.