Pakistan, Iran agree to extend power sale agreement
Publishing date: 09 December 2025
Published in: Business Recorder
Pakistan and Iran have reportedly agreed to extend their electricity sale agreement, setting the price between 7.7 and 11.45 cents per kWh after successful negotiations between the concerned entities of both countries.
The revised agreement is expected to be placed before the Economic Coordination Committee (ECC) of the Cabinet for approval on Tuesday (today).
The previous electricity sale arrangement between the Central Power Purchasing Agency–Guaranteed (CPPA-G)/NTDC and the Iranian company M/s Tavanir expired on December 31, 2024. The Prime Minister’s Office had also sought an update on the renewal of the contract.
Pakistan currently imports 100MW of electricity from Iran to supply the bordering districts of Balochistan, with payments historically made through informal arrangements or barter trade between the two countries. The import amounts to around 18 million units annually. The current price of Iranian electricity supplied to Balochistan exceeds Rs27 per unit, significantly higher than the cost of power generated from imported coal and RLNG.
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According to sources, a Tavanir delegation visited Islamabad on December 25, 2024. Negotiations were subsequently held on December 26–27 at the CPPA-G office to finalize the terms of Amendment No 10. A detailed record note summarizing the outcomes of these meetings has been shared with the Prime Minister’s Office.
Regarding the minimum take-or-pay obligation, both sides have agreed that the buyer will take or pay Rs30 million on all interconnection lines.
For price determination, several proposals were considered before both sides agreed on the following formula: R=3.2+0.075×P, where R represents the electricity price in US cents per kWh, 3.2 is the fixed portion of the delivered electricity cost, and P is the monthly average price (in USD) of a barrel of crude oil in the OPEC basket—ranging from USD60 to USD110 — as published on the OPEC website.
Despite the formula-based pricing, the delivered electricity price will remain within the agreed band of 7.7 to 11.45 cents per kWh.
Line-loss sharing arrangements agreed earlier on August 9, 2023, for the Polan–Jiwani interconnection line, and on June 25, 2024, for the Pishin–Mand interconnection line have also been incorporated into the revised contract under Amendment No 10.
Both sides have agreed to brief their respective authorities about the finalized terms before formally signing Amendment No 10.
Before the negotiations, the Chairman of Tavanir, Mostafa Rajabi Mashhadi, wrote to CPPA-G CEO Rihan Akhtar, referring to earlier correspondence, including a letter dated October 1, 2024, in which Tavanir reaffirmed its readiness to conclude Amendment No 10 and renew the November 6, 2002 electricity sale contract between Tavanir and CPPA-G.