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Turkey Electricity Debt at $200m

Turkey Electricity Debt at $200mTurkey Electricity Debt at $200m

Iran has suspended power export to Turkey for not paying the electricity bill that now has reached $200 million, a deputy energy minister said on Friday.

“As long as the dues are not settled, Iran will not resume power exports to the neighboring state,” Houshang Falahatian was quoted as saying by Mehr news Agency.

According to Falahatian, Turkey has pledged to pay the bill in five months, but Iran has pulled the plug on exports “over doubts that Turkey would hold up its end of the bargain.”

The power export contract with Turkey, signed in 2015, is still in place, the official said, hoping that the matter would be resolved soon.

According to the Turkish newspaper Daily Sabah, due to torrential rains, most dams in Turkey are about to overflow, which explains why electricity generation via hydroelectric dams has maximized and Turkey does not need to import power.

According to reports power export from Iran to the neighboring country in the period between March-September was almost half compared to the corresponding period in 2015.

Referring to other countries’ electricity debts to Iran, Falahatian said Iraq’s debt has reached $1 billion “that has nothing to do with financial and banking restrictions.”  However, so long as the fresh round of negotiations continues to settle the bills electricity exports will continue.

Falahatian recalled that Iraqi authorities had agreed to repay the debt by paying $100 million per month. “After three installments they deferred.”

He did not explain why Baghdad was not meeting its financial commitments. It was also not clear from when the $1 billion was pending. Observers say the plummeting oil prices have eaten into the budgets of all oil exporting countries, namely Iraq that is fighting a bloody insurgency with the so-called Islamic State and is in the process of rebuilding the war-ravaged country.

Many parts in the neighboring Arab state are facing chronic power shortages with reports saying that electricity outages in the capital and some big cities at times last for hours several times in a day/night.

  Subsea Supply Plan

According to Falahatian, talks have been held with other Persian Gulf littoral states, including the UAE and Oman, to lay an underwater cable for power export.

He said the project’s first phase calls for power supply to Abu Dhabi.

“Laying subsea cables is cost-intensive, which explains why the project needs to be financed by both Iran and the importers,” Falahatian said.  The cost of the project is yet to be determined.

“Iran is expected to raise more than $434 million in revenues from electricity export in the current fiscal year that ends in March 2017,” he said, referring to plans to increase installed power capacity from the current 75,000 megawatts to 100,000 MW by the end of the sixth economic development plan (2016-21).

 

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