Power Contracts Suspended Due to Forex Volatility

Power Contracts Suspended Due to Forex VolatilityPower Contracts Suspended Due to Forex Volatility

Some 300 electricity contracts signed between the Energy Ministry and private sector have been suspended as a result of the record rise in the foreign exchange rate, the head of Iran Electricity Industry Syndicate said.

"Some 300 contracts worth 20,000 billion rials [$153 million] have been suspended due to high costs and a rising dollar," Alireza Kolahi also told YJC on Tuesday.

The official noted that the government was supposed to allocate more foreign currencies to the energy projects, but it has so far failed to do so.

"We are facing problems buying raw materials, active high voltage insulation and transformer insulation," he said.

Kolahi further said that the country is expected to experience intermittent outages if electricity prices do not increase.

Iran's currency has lost about two-thirds of its value this year, hitting a record low earlier this week of 140,000 rials to the US dollar. It recovered to trade at 130,000 per dollar on Saturday in the open market.

The rial has been hit by the reimposition of US sanctions, financial difficulties at local banks and strong demand for safe-haven dollars among Iranians.

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