Economic Indicators

Iran and Pakistan Entering into New Partnership for Electricity Supply

By Forexminute - Jonathan Millet | Economic Indicators |

Iran and Pakistan Entering into New Partnership for Electricity Supply

Iran which has been facing a lot of challenges on the international front due to its nuclear program, which is against the international law, has now agreed to provide electricity to Pakistan. In the recent agreement, Pakistan and Iran will sign an initial deal for the supply of 1,000 megawatts of electricity. The agreement is aimed to overcome the crippling energy crisis in Pakistan.

Though the agreement has not yet been signed, the preparations are going on as according to the government sources, the Ministry of Water and Power has called for the vetting of a draft of memorandum of understanding (MoU). The MoU according to the government sources will be signed with Iran for electricity imports after due process is done with.

Ambitious Project for Pakistan

Though it is a great relief for Iran as it will be getting returns on the project, it will be a great relief for Pakistan which is facing huge challenges in providing power to its people and industries. Now under the new agreement Pakistan will be paying 8-11 cents per unit of electricity under the formula agreed with Iran, which is quite a competitive price.

The project will be funded by a loan which according to the sources will be given by Iran which has expressed its willingness to provide a loan of $800-$900 million. Not just money but the entire project seems to be completed by Iran as it will also build a powerhouse in its Zahedan province bordering Pakistan to generate electricity for the purpose.

Earlier Deals Could Not Materialize

Reports are coming that the project also comprises a 700-kilometre transmission line of 500 kilovolts. The lines will be laid from the Pakistan-Iran border to Quetta. According to the observers who have been seeing Iran and Pakistan relations vis-à-vis power related agreement, there was a similar measure taken by the previous government wherein Iran had expressed interest in setting up a 200MW power plant in Baluchistan; however, that did not materialize.

Iran was also willing to install smaller plants of 25MW each on the ground as well as on barges to help Pakistan overcome the power crisis the last year; however, due to the economic sanctions imposed by the U.S. and allied countries did not allow it. Now that the economic sanctions have been loosened to some extent, Iran can mull any such plan that it feels helps it export energy to get Forex

To contact the reporter of this story: Jonathan at john@forexminute.com

About: Forexminute - Jonathan Millet

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Jonathan Millet is currently the proud CEO of ForexMinute.com, the brand new financial news portal which is making waves among Forex traders around the globe for the innumerable Forex resources it off...


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