Pakistan, Iran extend power sale agreement for Balochistan border areas with revised pricing

Pakistan and Iran have finalised an extension of their electricity sale agreement for Balochistan’s border areas, with revised pricing set between 7.7 and 11.45 cents per kilowatt-hour (kWh), following successful negotiations between Central Power Purchasing Agency-Guaranteed (CPPA-G) and Iranian company Tavanir, according to a news report.  

Pakistan imports 100 megawatts (MW) of electricity from Iran to supply bordering areas of Balochistan. The import amounts to approximately 18 million units annually, with the electricity priced at over Rs 27 per unit—higher than the cost of electricity generated from imported coal and RLNG. 

Payments have traditionally been made through informal channels or barter trade arrangements.

The previous agreement, which expired on December 31, 2024, has been updated under Amendment No. 10.

Negotiations were held between a Tavanir delegation and CPPA-G officials in Islamabad on December 26-27, 2024, to finalise the amendment terms. A record note of the discussions has been submitted to the Prime Minister’s Office for review. 

Key elements of the agreement include a minimum take-or-pay clause, which requires the buyer to pay Rs 30 million on all interconnection lines, and a new pricing formula tied to global crude oil prices.

Additionally, line loss-sharing mechanisms for the Polan-Jiwani and Pishin-Mand interconnection lines, established in August 2023 and June 2024, respectively, have been incorporated into the agreement.

The updated agreement is expected to provide continued electricity supply to Balochistan’s border areas while formalizing long-standing trade arrangements between the two countries.