Iran Firms Complete Overseas Power Projects Worth $4.6b

EghtesadOnline: Iranian companies involved in the water and power industries undertook 100 foreign projects in the last decade, overseas project manager in Iran's Water Resources Management Company (a subsidiary of the Energy Ministry) said.

News ID: ۷۴۹۶۱۸

04 February 2020

“Projects costing $4.6 billion were launched in Tajikistan, Africa, Latin America, Oman, Kazakhstan and Iraq,” Shahram Jalali was quoted by IRNA as saying.

Water and power sectors accounted for almost 80% of technical and engineering services export since 2013, according to Financial Tribune.

According to the official, domestic firms are capable of constructing thermal power stations, gas turbines, hydroelectric dams and power generators.

Nonetheless, not being a member of World Trade Organization (plus lack of cordial international relations) is seen as a major hurdle to Iran’s active presence in the global engineering and technical services market.

“Removing banking restrictions (imposed by the US sanctions) and manufacturing quality products with proper guarantees are keys to asserting our presence in international markets. It is regrettable that not upholding national interests has been a missing link in our industries.”

Iran has comparative advantage in comparison to regional players including access to international sea lanes, abundant resources, educated labor force and shared borders with countries that need its resources and engineering services, Jalali noted.

Data released by the Trade Promotion Organization of Iran shows income from exports in the power industry surged to a record $2.5 billion in fiscal 2016-17, over 98% of which came from technical and engineering work.

Better Performance

According to Payam Baqeri, vice president of Iran Electrical Industry Syndicate, the power sector has performed much better compared to other sectors when it comes to exporting technical services.

Iran’s power industry is present in over 40 international markets as exporter of goods and services under engineering, procurement and construction contracts.

Iranian companies are active in Iraq and Syria as the two biggest regional markets and have 58 projects in  Turkmenistan, Afghanistan, Azerbaijan, Armenia, Pakistan, Tajikistan, Uzbekistan, Sri Lanka, Uganda, Nigeria, Ethiopia, Oman and India.

“All said, the power sector still has a small share in non-oil exports due to the wrong policies, one of which is the export of low value-added raw materials. Raw materials have the highest share in our non-oil exports,” Baqeri said, echoing the stance of many economic experts demanding a deep revision of export policies.

Experts say exporting raw material is not a sustainable economic policy in today’s highly competitive world and it is high time that Tehran change course and focus on the export of value-added goods.

They have been pushing for promoting value-added products, in particular export of electricity, technical and engineering services and equipment as well as construction of power plants, transmission lines and distribution networks.

Data released by TPO show that the country generated $4.1 billion from electricity exports between 2013 and 2018.

Iran exported over 42,926 million kilowatt-hours of electricity to neighbors (Pakistan, Afghanistan and Iraq) during the period and domestic companies signed overseas water and power projects worth $5.1 billion.

Established in 2000, Iran Electrical Industry Syndicate has 450 members including manufacturers, contractors and consultancies from the electrical industry. It strives to promote Iran’s electrical industry overseas.