Iran's Energy Ministry Defends Power Deal With Turkish Co.

Iran’s power agreement with the Turkish energy company Unit International in June will help improve competitiveness between Iranian and foreign companies in the energy sector, a senior official at the Energy Ministry said.

Unit International signed a $4.2 billion deal with Iran’s Energy Ministry in June to build seven gas power plants in seven regions in Iran.

“The deal does not mean the Energy Ministry will neglect the domestic private sector,” Homayoun Haeri was quoted as saying by ISNA on Friday without providing details.

Construction of the power stations, which will have a combined installed capacity of 6,020 megawatts, is expected to begin in the first quarter of 2017.

Haeri added that Iran’s Thermal Power Plants Holding Company, a subsidiary of the Energy Ministry, is evaluating the drawbacks and strengths of the power deal with Turkey.

“The Energy Ministry’s approach is to prevent problems for local companies. It is for this reason that some clauses have been added in the contract (with the Turks) to support the private sector" such as the inclusion of domestic companies in the building process.

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.

Energy Minister Hamid Chitchian rejected the criticism of the multibillion dollar deal in August, saying, “Objections raised by sections of the media against the contract and the Turkish firm’s reputation are baseless. Unit International built five large power plants in Iran during the 1980-88 Iran-Iraq war. How can a company build power plants 28 years ago that are up and running and not have the ability to construct new ones?”

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.

Following the removal of international sanctions in January, Turkish firms have shown strong interest in Iran’s water and power projects.

Iran ranks first in the Middle East and 14th in the world in terms of installed power generation capacity.

Nominal power generation capacity stands at over 75,000 MW, with 62,000 MW  from thermal power plants, 12,000 MW from hydroelectric plants and 1,000 MW from nuclear power.