Pakistan is in the final stages of negotiating a deal to increase its electricity imports from Iran tenfold, a Pakistani government spokesman said yesterday, part of a push to boost trade if sanctions relating to Iran’s nuclear programme are phased out.
Pakistan’s trade with Iran, worth 1.3bn in the financial year 2008-9, plummeted to 217m in the 2013-4 financial year.
The drop came after the United States, European Union and UN imposed sanctions aimed at halting Iran’s nuclear programme, which Western powers suspected was aimed at creating a nuclear bomb.
A deal reached last month means the sanctions could soon be phased out.
The US Senator Brian Schatz said last Monday he backs the US-led international nuclear deal with Iran, moving President Barack Obama one vote closer to locking in enough Senate votes to make the deal fly.
Iran currently exports around 100 megawatts (MW) of electricity to the areas of Pakistan that border Iran.
Pakistan is in the final stages of negotiating a deal that will increase that to 1,000 MW, said Zafar Yab Khan, the spokesman for the Ministry of Water and Power.
“It’s likely to be finalised shortly,” he said. “The power purchase agreement would include a transmission line.”
He declined to give details until the agreement is signed.
Energy-starved Pakistan suffers about 12 hours of power cuts per day and is keen to import Iranian oil and gas, said Robina
Athar, additional secretary in Pakistan’s Ministry of Commerce. “The biggest issue right now is the payment mechanism,” said Athar.
“Both central banks are in communication and hope to find a mechanism before sanctions are lifted.”
She said Pakistan was upgrading its current border post with Iran and preparing to open a second one in anticipation of greater trade. Iran was interested in Pakistani textiles, surgical goods, sports goods and agricultural products, she said. Pakistan wanted energy products, iron and steel.
She said that Pakistan would set up industrial sites in the impoverished border area, especially petrochemical storage, and link the infrastructure to a 46bn project with China dubbed the China-Pakistan Economic Corridor. Plans for a gas pipeline between Iran and Pakistan have also been given new impetus, said Mobin Saulat, head of state-run Inter State Gas Systems, which oversees the Pakistan’s pipeline network.
Most of the pipeline – stretching from Pakistan’s industrial heartland of Punjab to a planned terminal for liquefied natural gas at Gwadar port in the south – would be built as part of the Chinese project, Saulat said.
Meanwhile, Iran has said it is ready to export 3000MW electricity to Pakistan, raising hopes that the economic cooperation will be increased after lifting economic sanctions on Tehran.
Both the countries have decided to undertake feasibility studies to add more provisions of electricity for this mutual cooperation.
Pakistan’s high-level delegation will visit Iran for negotiating Power Purchase Agreement (PPA) for 1000 megawatt.
Both the country were discussing provision of 1000MW electricity provision but they remained unable to finalise the deal in the wake of economic sanctions imposed by the United Nations and other western allies of USA.
Iranian Ambassador Ali Raza met Secretary Ministry of Water and Power Mohammad Younus Dagha last Monday.
According to announcement made by Ministry of Water and Power that during the meeting various ongoing and future energy projects came under discussion.
The Secretary Water and Power while acknowledging the Iranian offer for export of electricity to Pakistan, said that both the countries are already working on the proposal and modalities for 1000MW are in its final stages. He said that this phase could be readily executed.
It was agreed during the meeting that a high level delegation would visit Iran shortly to negotiate and finalise power purchase agreement (PPA) for 1000MW of electricity that Iran offered to export to Pakistan.
The Iranian Ambassador emphasised that after 51 agreement, his country is keen to speed up power sector cooperation between Pakistan and Iran. The ambassador highlighted that Iran is ready to export 3000MW electricity to Pakistan.
It was also agreed that the delegation would also discuss modalities for completion of feasibilities for additional 2000MW export to Pakistan to take the total to 3000MW.
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