Oct 13 - 19, 2008

Islamabad and Tehran have agreed to expedite the process of importing electricity from Iran to Pakistan. As a result of a decision taken during a meeting of Iran's Ambassador to Pakistan Mashaallah Shakeri with Minister for Water and Power Raja Pervez Ashraf last month, a transmission line for importing 100MW of electricity from Iran for Gwadar will be launched during the visit of the Iranian minister for energy this month. The minister is due in Pakistan in the mid of this month. Pakistan has also signed a memorandum of understanding to purchase 1,000MW from Iran.

The Iranian government had been asked to help meet necessary electricity and gas requirements of District Gwadar, which includes Gwadar, Pasni, Ormara and Jiwani. Iran has tentatively agreed to meet the energy requirements of Balochistan province. The Gwadar port authorities had reportedly asked the federal government to manage gas and electricity requirements especially for the proposed hotels, restaurants, gas stations, and other development projects in the area.

An agreement was signed on February 7, 2007 with Iranian company Tavanir under which Pakistan will buy 100-megawatt power from Iran for Gwadar deep-sea port in Balochistan. Under the deal, Iran will supply100-megawatt power to Gwadar port from January 2009 through a 170km long 220 KV double circuit transmission line between 220 KV Polan sub station at Iran side and 220 KV Gwadar sub-station. A 100km long line will be constructed in Pakistan and remaining 70km in Iran. The total cost of the project has been estimated at US$86 million, out of which $26 million will be borne by M/s Tavanir and is included in the tariff, which is 6.25 cent, applicable from December 31, 2008, whereas the remaining $60 million will be borne by Pakistan. The tariff for one year has been fixed at 6.25 cent per unit and it will be reviewed after one year. The import of power can be enhanced up to around 400 MW to meet the future requirement of Gwadar as well as the coastal areas of Balochistan.

Tavanir is the state-controlled power generation, transmission and distribution company that manages Iran's electricity sector. It has the capacity to generate a total of 36000 megawatts. The company's capital of worth10 million Rials is divided into 1000 registered shares each of worth10. Rials and 100 per cent of the shares belong to the Iranian government. Given the growth in power consumption, the company plans to double power generation capacity to 70,000 megawatts within the next 10 years.

Iran is already supplying 30MW electricity to the coastal belt of Balochistan. The QESCO had started supplying electricity to the people of Mekran after getting supply from the Iranian power transmission line system on September 8, 2003. The QESCO constructed the power transmission lines and finally connected it with Iranian grid system. It spent Rs 138 million on building the power transmission system. Iran is supplying electricity through its 132KV line. With the supply of power from Iran, the QESCO made a saving of Rs 700 million, it was spending to operate the gas turbine for power generation. According to an estimate, Mekran needs 17.5 Megawatt of electricity.

Gwadar port has yet to take-off for lack of supportive road links to transport cargo up-country. By executing the strategic projects like national trade corridor (NTC), giant shipyard at Gwadar, Pakistan can appear on the world map of ship building, repair and deep sea container handling in next five years time. $5.36 billion NTC project is mainly aimed at decreasing the cost of doing business through improved trade logistics and connectivity. As compared to Karachi and Port Qasim, which operate on a royalty basis, the selection of the port operator for Gwadar was on the basis of a gross-revenue-sharing formula. Hence the operator will have to set up three different companies to look after various activities at the Gwadar port, including cargo operation, marine operation and the free economic zone. The port is expected to work as the main transshipment port for cargoes destined for Dubai and Karachi Port. Mother vessels from US, Europe and the Far East will discharge cargoes destined for Dubai and Karachi at the Gwadar Port for onward dispatch through feeder vessels. This would save time and cost for ships coming to the area.

Gwadar needs enough electricity to meet the demands of its future commercial and industrial estates. With the development of Gwadar port, the hotel industry will grow at a faster pace providing residential and recreational facilities to the foreign tourists, business tycoons and representatives of the Multinational firms and companies in Gwadar. The future demand for electricity in Gwadar will be higher and may increase, according to an estimate, from 14MW in the year 2010 to 74 MW in 2030 and 370 MW in 2050.

The Iranian ambassador had offered to invest in power projects particularly in hydropower plants and upgrade the country's transmission lines system on low cost. Balochistan coast has tremendous potential in offshore exploration in oil & gas sector, which is yet to be exploited. If offshore drilling were successful, it would give a tremendous boost to Gwadar development, as it would meet entire energy requirements not only of Gwadar but also of Pasni, Turbat and adjoining areas.

The future port city of Gwadar will have power supply from the Pasni Power House, the Panjgur Power Plant and Iran. As a long- term strategy, a grid station is being constructed in Gwadar. Moreover, 132 KV transmission line from Pasni/Turbat is being extended to Gwadar at a cost of Rs.360 million. Eventually, Gwadar will be linked to the national grid as soon as the demand grows for power consumption. The Pasni power house was supposed to cater to the power needs of entire Mekran region. It had the capacity of generating 40 megawatts, but its generators incurred faults and were in dire need of repair. The government rehabilitated the Pasni Power House ensuring power supply to some parts of Mekran. The QESCO also plans to take the power transmission line from Pasni Power House to Gwadar.