Iran Power & Water Equipment & Services Export Company (Sunir) was established in 1994 on the recommendation of the Electricity Ministry.
At the time, the expertise and equipment domestically available for the power, water and energy sectors far exceeded the country’s needs, so the ministry suggested companies combine forces to exploit business opportunities outside Iran.
To date, the private joint-stock company has been awarded $1.2bn worth of contracts and is involved with projects in more than nine countries, including the construction of the new power plant for Sadr City in Iraq. The company’s net profits totalled $5.6m in 2007.
Sunir’s shareholders comprise more than 20 equipment manufacturers, contractors and consultants who are active in the power, water and energy sectors.
Engineering firm Gods Niroo is the largest stakeholder, owning 13 per cent. The other firms each hold 2-6 per cent of the remaining shares.
Date established: 1994
Main business sectors: Power, water and energy
Main business regions: Middle East and
Managing director: Reza Ebadzadeh
The company was set up with an initial working capital of $100,000 and employs 96 staff at its head office in Tehran.
Reza Ebadzadeh is Sunir’s second managing director. Ebadzadeh’s professional background includes stints at the Electricity Ministry and Iran Power Management Company (Mapna).
Prior to joining Sunir, he was commercial director at National Iranian Gas Company.
Sunir effectively acts as the international marketing arm of its shareholders, submitting bids for project tenders and then subcontracting out the roles among the various companies.
In the event that none of the shareholders wish to participate on a particular scheme, Sunir finds other partners to work with.
It describes itself as an engineering, procurement and construction (EPC) contractor. Sunir also has a strategic business unit dedicated to trading electricity and equipment.
Since its inception, Sunir has won contracts for power, water and energy-related projects in 15 countries worldwide.
Currently, it is actively working in Armenia, Azerbaijan, Cuba, Ethiopia, Iraq, Pakistan, Senegal, Syria and Turkmenistan.
Projects in progress include the construction of gas pipelines, power transmission lines, substations, wastewater treatment plants and pumping stations.
The firm has received wide recognition in recent months for its involvement in Iraq. Sunir is building a 315MW open-cycle gas-fired power plant in Sadr City, near Baghdad.
Extensive piling work is still being carried out, but Sunir expects to take delivery of the land within the next two months.
The plant is scheduled to start up 24 months later. The $128m turnkey contract was split 85:15 between Sunir and fellow Iranian firm Ameran Ofoq.
Ebadzadeh says the most significant project in Sunir’s history is the electricity trading scheme between Turkmenistan and Iran.
Under a long-term co-operation agreement formulated by the governments of Iran and Turkmenistan in 2003, Turkmen power is sold on to third parties such as Turkey and Iraq, via transmission lines running through Iran.
Sunir, together with the Iran Power Transmission & Distribution Management Company (Tavanir), manages the project on behalf of Tehran.
The UN sanctions imposed on Iran in 2006 have had little impact on Sunir’s day-to-day operations.
As the company does not carry out projects inside Iran, it can still access the equipment and materials needed for its projects, even items under embargo.
Nevertheless, it has had difficulties with monetary transfers being rejected, and business opportunities have been lost simply because it is Iranian.
Sunir aims to win $200-300m worth of projects each year. However, the company is currently a little off-target, winning just $350m worth of projects over the past two years.
Nevertheless, it is lining up a series of new contracts, including rural electrification and water projects in Sri Lanka, and grid interconnection schemes between Pakistan and Iran.
Sunir has plans to expand its non-EPC business too, and Ebadzadeh hopes it will become a major utility company, actively trading electricity between countries.”
Building on its experiences in Turkmenistan, he wants Sunir to take on a leading role in the grid interconnection and energy exchange projects being considered by other countries.
There are also plans for Sunir to set up electrical equipment manufacturing facilities outside Iran, including one in Syria and three or four in Venezuela.
Sunir is fast earning a reputation for being willing to take on power, water and energy-related projects anywhere in the world, including volatile countries.
This can-do attitude will undoubtedly ensure a steady inflow of orders but, inevitably, many will be high-risk and low-tech projects.
The danger with this approach is that the company could end up spread thinly around the globe, with a heavy workload of challenging projects.
Sunir would do better to focus its activities on the Middle East and Central Asia, where it has already enjoyed much success, and look to penetrate new markets opening up in Africa through targeted marketing campaigns.
It should also exploit the growing interest in those regions for energy trading schemes and try to get involved in the proposal to set up an energy corridor stretching from Russia to Turkey and beyond, which would enable sales of electricity to the profitable European market.
A dip in turnover and profits since 2006 suggests Iran’s political isolation is holding back Sunir’s growth, as companies avoid doing business with the state.
But high-profile projects such as the Sadr power plant in Iraq will do much to boost the company’s standing, and it should make as much mileage as possible out of the positive publicity generated by its involvement in the rebuilding of the worn-torn country.
Q&A: Reza Ebadzadeh, managing director
Does Sunir hope to play an important role in the rebuilding of Iraq?
We hope so because at the moment we are one of the few suitable companies that dares to go into Iraq.
We are participating in as many tenders as possible. We have an office there and our own staff on the ground.
We see opportunities in Iraq and Afghanistan as these are countries we can easily get to, and we speak similar languages.
Will Iran’s poor relations with the US put limitations on Sunir’s involvement in Iraq?
I am not political, but I think it is accepted by the US that Iranian companies will go and work in Iraq.
Of course, they would not allow Iranian companies to undertake certain projects, such as telecoms, but it is accepted that Iranian companies will do power and water work as that will improve the welfare of the people.
Our advance payment [for the Sadr power plant contract] came through a US bank.
Do you believe UN sanctions have caused Sunir to lose business?
If we had not faced sanctions, we would have had many more opportunities. I believe we would have had the ability to create joint ventures with big manufacturers and leading names.
Has Sunir tried to parti-cipate in independent power projects and independent power and water projects tendered in the Gulf?
Of course. But competition in the Gulf is high.
It is difficult to win projects there and the margin is low as companies use a lot of cheap labour from India.
We can have higher margins in the CIS [Commonwealth of Independent States] countries and in Africa.
What risks and opportunities do you see for Sunir?
Being an Iranian company, we have some limitations. On one side, it is good for us to buy equipment from Iran because it is cheaper, we know the quality is good and we can check the standards.
But on the other hand, we do not have mechanisms for hedging – for example, the dollar or euro against the rial – and this is one of our major risks.
Another limitation is the global financial crisis.
In the 1980s and 1990s, a lot of big companies such as [Germany’s] Siemens and [the US’] ABB acted as engineering, procurement and construction [EPC] contractors, and then they stopped.
Now they prefer just to sell us equipment and to be on the safe side. They won’t go to Iraq, but we will go for them.
If they change their minds after this financial crisis and want to go directly to countries, maybe in Africa, which are unsafe for them, it will be a threat for us and our profits will come down.
In that case, we would go back as the subcontractor.
They are manufacturers and because of their economies of scale, their prices are lower than ours, so we cannot compete with them if they want to act as EPC contractors.
But as long as they don’t change their minds, we have a lot of opportunities.
With so much development needed internally, especially in the power sector, can Iran afford to export technology and expertise?
Yes. The only limitations are on the power generation side, with only one gas turbine producer, Mapna, in Iran.
But there is a worldwide shortage of turbines, with nothing available until 2011-12.
At Mapna, though, things are not so bad. Our turbines for Iraq will be ready next month for shipment.
And there is no limited capacity on the hydro side or in transmission and distribution. We can manufacture five or six times more equipment than we need in the country.
We have more technology and expertise than necessary. That is why we export, otherwise we could not afford to do so.
Sunir key facts
Sunir’s working capital when the company was founded in 1994: $100,00
Capacity of the turbines to be installed in Sunir’s first Iraq power project in Sadr City: 157.5MW
The total value of projects awarded to Sunir to date: $1.2bn