Private Firms Encouraged to Implement Power Projects

Private Firms Encouraged to Implement Power ProjectsPrivate Firms Encouraged to Implement Power Projects

The government's policy regarding the implementation of power projects is to involve private investors, energy minister Hamid Chitchian said at the opening ceremony of second phase of Pareh Sar Combined Cycle Power Plant, in the northern Gilan Province.

Pareh Sar is the first power station built using only private sector finances. It has a generation capacity of 968 megawatts (MW), and comprises two blocks, each with two 162 MW gas units and a 160 MW steam unit.

Back in 2000, a consortium of Italian and German companies together with Iran Power Plant Projects Management Company (MAPNA) were awarded the project through an international tender, marking private sector's first cooperation in the electricity sector.

However, foreign partners relinquished the project in 2007 as the issuance of required guarantees proved problematic and caused delays. According to a Press TV report citing the energy ministry, Germany had invested $445 million in construction of the power plant.

Consequently, a build–operate–transfer (BOT) contract was signed with MAPNA, whereby the private firm was to build the infrastructure project, operate it and eventually transfer ownership of the project to the government.

"The project, which was to be carried out by foreign investors, is now adeptly implemented by Iranian experts," MAPNA's managing director, Abbas Aliabadi said. "The industry is well functioning in the absence of foreign enterprises, by relying on its own capabilities," he stated.

The project leads to daily conservation of approximately two million liters of diesel or its natural gas equivalent, and is saving the electricity industry up to$5 billion per annum.  

Gilan Province's power generation capacity will enhance by 320 MW with production from the two steam turbine units due commissioning in the second phase. The units were constructed at a cost of 300 million euros ($347 million), according to Aliabadi.

Four gas units with a total capacity of 648 MW went into operation in the first phase of the project in 2012.

"One of the most effective measures leading to fuel conservation is to convert the existing power plants into combined cycle ones," said the energy minister, adding: "the process is being carried out using domestic potentials."

The second phase of Pareh Sar power plant was officially inaugurated on Tuesday during a ceremony attended by First Vice-President Es'haq Jahangiri, the energy minister and local authorities.  

Private enterprises are encouraged to cooperate in construction of power plants, particularly waste-to-energy plants (WtE), Chitchian said, adding that the ministry guarantees purchase of power generated through such plants at a fair rate.

"The energy ministry is struggling with financial problems," said Jahangiri, noting that the ministry has been discussing issues surrounding its debts at meetings with private investors.

Close to 8,000 MW capacity of gas-fired plants was turned into combined cycle plants over the past year with $4.5 billion investment. Such plants normally use both gas and steam turbines to produce up to 50 percent more electricity from the same fuel than traditional power plants. Improving the efficiency of power plants will help reduce fuel consumption, save costs for electricity generation and help protect the environment.

Chitchian had earlier stated that the plant conversion program alongside the utilization of several steam turbines with 8,000 MW capacity would help save fuel consumption annually by $3.7 billion.

Efficiency of power plants across the country is estimated to be already around 37 percent, but the ministry has plans to enhance the efficiency by attracting private sector investment and introducing new projects.