News ID: 176642
Published: 0658 GMT January 29, 2017

Energy Ministry's power plant deals top $10b

Energy Ministry's power plant deals top $10b

Iran has signed agreements valued at around €10 billion ($10.7 billion) with German, Russian, Chinese, South Korean and Turkish companies for the construction of new power plants, announced deputy energy minister for planning and economic affairs.

Alireza Daemi described the preliminary agreement with Turkish energy and construction company Unit International as one of the biggest of its kind after the international restrictions were eased. He hoped the ministry will finalize the deal before March, Mehr News Agency reported.

Unit International signed a $4.2-billion preliminary deal with Energy Ministry in June to build gas power plants in seven regions in Iran. The power stations would have a combined installed capacity of 6,020 MW.

"The deal with Unit International is an agreement in principle … it is expected to be approved as a full and final contract by March," the deputy minister said. He also sought to allay concerns over the role of domestic contractors in future energy projects.

"The ministry will ensure that at least 50 percent of operations in all new power plant contracts, including with Unit International, will be carried out by domestic companies," he said, underlining that the transfer of knowhow was a key requirement for multinationals seeking to work in Iran.

German engineering giant Siemens is also in agreement to supply turbines to Iranian power plants. Siemens signed a deal last year to deliver 20 F-Class turbines and also share turbine manufacturing knowhow.

The company also said last week that it has received a major order from Iran's Hampa Engineering Corporation for 12 compressor trains to be used in two onshore gas processing plants.

Mohsen Nayebzadeh, CEO of Siemens in Iran, said the deal is the company's "first huge oil and gas order since the easing of sanctions".

Meanwhile, Moscow, Tehran's economic and strategic partner, is making sure that Russian companies will get a fair share of energy projects in the Iranian market.

Russia's major energy company,‌ Technopromexport, is due to start construction of a 1,400 MW thermal power plant in the southern Hormuzgan Province next month.

The power plant which has four units, each with a capacity to generate 350 MW, will become operational in five years.

The Russians will reportedly finance 85 percent of the cost of the project which is estimated at $1.6 billion.

However, Daemi appears to have excluded Iran-Russia's lofty nuclear energy deal from his account of post-sanctions power deals.

Iran is poised to build two new reactors with Russian help at the site of its only nuclear power plant in Bushehr in the south. The new units reportedly will cost $10 billion. Construction is expected to begin next month and last a decade.

With an installed power production capacity of around 75,000 MW, Iran meets almost 80 percent of its electricity demand from thermal plants that have been operating for decades. Close to 12,000 MW is generated from hydroelectric plants and 1,000 MW from the sole nuclear power plant in Bushehr Province.

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