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Iran Downscales Power Deal With Turkish Company

Ministry Downscales Power Deal With Turkish CompanyMinistry Downscales Power Deal With Turkish Company

Turkish energy company Unit International's deal with the Energy Ministry has been cut down to one-third from an initial agreement to construct power plants in Iran with a total output capacity of 6,000 megawatts.

"The power plant deal with Unit International has been reduced to 2,000 megawatts," Mohsen Tarztalab, the chief executive of Iran's Thermal Power Plants Holding Company said, IRNA reported on Saturday.

"The Energy Ministry will wait and see if funding for and construction of the 2,000 MW in new power production capacity will proceed according to plan and then make a decision" for the other 4,000 MW, the official said.

Unit International signed a $4.2 billion preliminary deal in June to build gas power plants in seven regions.

Under the revised deal, the Turkish company will initially construct two combined cycle power plants: a 1,200-MW plant in the city of Saveh, 100 kilometers southwest of Tehran, and an 800-MW plant in Zahedan, Sistan-Baluchestan Province.

The deal with the Turks has apparently hit a snag amid claims that Unit International’s main field of activity is hotel construction and that it has no experience in the construction of power plants. Hamid Chitchian, the energy minister, has described the objections as baseless.

"According to the agreement, most equipment for the Zahedan and Saveh power stations will be manufactured by domestic companies," he said.

The highly-efficient H-Class turbines, which will be used for the first time in the two power units, are to be purchased from the German engineering giant Siemens.

"The most important issue is funding. The two sides are expected to discuss and settle the issue in the near future," Tarztalab said without providing details.

He said the two power plants entail an estimated $1.2 billion in investment, with unnamed European banks to provide 70% of funds and the remainder to come from domestic lenders.

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