First BOO projects to boost power sector

21 June 2002

State power generation and transmission company Tavaniris gearing up to issue the tender for the country's first build-own-operate (BOO) power project. The initiative is part of the company's plan to add 20,000 MW to the existing installed capacity of 33,000 MW by 2012. The programme will allow investors for the first time to set up and operate a power plant without transferring it back to Tavanir.

'We expect to issue a BOO tender within the running Iranian year,' Bahman Masoudi, deputy for research & technology at Tavanir told MEED in late May. 'It will be a limited tender and the capacity of the plant has yet to be decided. But it will probably be in the range of 600-700 MW.'

Foreign companies will be able to participate in the development of BOO projects in co-operation with local firms, which will lead Iranian/international partnerships.

The BOO structure is distinct from six build-operate-transfer (BOT) schemes presently under negotiation in that it will allow private investors to retain full cost and project control over the power facility. Under the BOT contracts, investors agree to return the power plant to Tavanir after a specified period of time (MEED 31:5:02).

Masoudi says Tavanir's plans have already attracted private sector interest, with two Iranian companies having submitted BOO proposals in recent weeks. The legal framework for the establishment of private power projects on a BOO basis is already in place, Masoudi says. 'According to the third five-year development plan and the budget law, BOO projects are possible. It has also been approved by the guardian council.'

Tavanir is taking additional steps to increase private investment in the local energy sector by selling off existing power stations. Masoudi says that about 10-15 per cent of all power plants will eventually be transferred to private investors.

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