Power Plant Privatizations Reach 55%, More to Come

EghtesadOnline: The Energy Ministry has privatized over 50% of power plants in the last few years and Iranian Privatization Organization is assessing the value of other power stations, Energy Minister Hamid Chitchian said.

News ID: ۷۷۸۶۳۱

20 August 2017

"Plans call for delegating at least 80% of all power plants across Iran to the private sector … Currently 55% of power plants have been privatized," Chitchian was quoted as saying by Mehr News Agency on Wednesday.

The minister added that more privatizations will get underway once IPO completes the value assessment of other power plants.

As outlined in Article 44 of the Iranian Constitution, a large part of executive responsibilities of the Energy Ministry ought to be transferred to the private sector, according to Financial Tribune.

"The private sector will be attracted to the power industry, only when it finds the industry financially rewarding," he said.

Chitchian noted that his ministry has issued licenses to build power plants with a total output capacity of 37,000 megawatts in the past 12 years, but the private sector has not been able to fulfill even half of its pledge due to financial constraints.

Criticizing the way power plants were privatized in the past, he said semi-governmental enterprises, which know nothing about power generation, should not be allowed to acquire power stations.

"No licenses have been issued for state and semi-governmental companies to build power plants in the last four years," he said, adding that there are now 54 renewable power plants in the country, all of which were completed with private sector investment.

---- Domestic Capacity

Rejecting claims that his ministry is oblivious to domestic capacities, Chitchian said, "Concluding agreements with internationals should not be interpreted as writing off the potential of Iranian enterprises."

Pointing to deals with international companies to construct power plants with a total output capacity of 15,000 MW, the minister said, "Clinching such contracts helps the country attract much-needed investment, because based on the terms of the deals, foreign companies are obliged to purchase a large percentage of their equipment from Iranian producers."

According to Chitchian, sometimes even some domestic firms procure their equipment from abroad as they are not produced in the country due to lack of know-how.

"Domestic manufactures should offer what they produce with more competitive prices to be able to attract more customers," he said, adding that complying with international standards and offering attractive prices are the only strategies to matter in global markets.

The minister believes that as long as there are gas turbines whose efficiency amounts to 40%, nobody, even domestic firms, will show interest in buying Iranian turbines whose efficiency is as low as 33%.

Referring to Iran's export of technical and engineering services to more than 40 countries, Chitchian said water and power sectors have made a significant contribution to the export of technical and engineering services in the past few years.

“Water and electricity services made up almost 98% of Iran's total exports of technical and engineering services in the fiscal 2015-16,” Alireza Daemi, deputy energy minister for international affairs, said.

"In the fiscal 2013-14, water and power services made up 47.4% of engineering exports, but the volume increased to 62.1% and 98.7% in the next two fiscal years respectively."