The client, state power generation and transmission company Tavanir, says three companies have already submitted their prequalification proposals for Khoy, which will be the first state-owned power plant to be sold off through a public tender.

Bidders will be asked to give a price for the existing plant and make a proposal for the energy conversion agreement (ECA). A payment guarantee is also under consideration. The successful bidder will be eligible to have a 100 per cent stake in the plant, with full foreign ownership set to be arranged through a company registered under local law.

Tavanir is also in negotiations with the local Bonyad Mostazafonfor the sale of the Zorgan power station. Bonyad Mostazafon is now working to prepare an offer for the plant, having recently signed a memorandum of understanding with the Energy Ministry.

Tavanir says its consultants, the local Ghods Niroo, Germany’s Fichtnerand legal adviser Allen & Overy, are preparing feasibility studies to determine which plants are to be sold next in the first round of the Energy Ministry’s privatisation programme.

According to Tavanir, the next round of sales will be tendered before the end of the Iranian year on 21 March 2004. Over the next 10 years, the ministry plans to divest all its power generation assets to private investors.