Pakistan paying $12m Iranian electricity arrears in instalments

Pakistan owes approximately $12 million to Iran’s state-owned electricity company, Tavanir, for power supplied to several areas of Balochistan, Energy Minister Awais Leghari has informed the National Assembly. The outstanding amount is being repaid in instalments under the continuing cross-border electricity arrangement.

The minister provided the information through a written response submitted to the lower house. Pakistan can import up to 204 megawatts of electricity from Iran under an agreement originally signed in November 2002 to meet electricity requirements in the Makran region, including the strategically important port city of Gwadar.

The supply agreement was amended in December 2024 and extended for another two years. It operates between the Central Power Purchasing Agency and Tavanir, while the electricity tariffs applied under the arrangement are approved by the National Electric Power Regulatory Authority.

A key provision requires Pakistan to purchase or pay for 30 million kilowatt-hours of electricity every month, regardless of whether the entire contracted quantity is consumed. This take-or-pay obligation means payment responsibilities can remain in place even when transmission limitations or local demand prevent the full allocation from being used.

Imported Iranian electricity enters Pakistan through four cross-border connections and serves parts of Kech, Panjgur, Gwadar, Washuk and Chagai districts. The supply network reaches Turbat, Panjgur, Tump, Gwadar, Pasni, Ormara, Mashkail and Taftan, along with villages surrounding those areas.

The Quetta Electric Supply Company is responsible for distributing the imported power, billing consumers and collecting payments at the tariffs notified by the national regulator. Despite the cross-border imports, load-shedding continues in the receiving areas and is applied according to aggregate technical and commercial losses recorded on the relevant distribution feeders.

Makran has also been connected to Pakistan’s national electricity grid, but infrastructure constraints continue to affect the quality and reliability of supply. Long transmission distances and voltage fluctuations remain significant obstacles, limiting the improvement expected from connecting the region with the wider domestic network.

Authorities are studying the installation of dynamic voltage-support equipment, including a static synchronous compensator, commonly known as STATCOM. Such equipment is designed to stabilise voltage on transmission networks. The technical study examining the proposed solution is expected to be completed by September 2027.

The imported power remains important for remote communities and commercial activity across southwestern Balochistan, where geographical distances make electricity transmission difficult and expensive. Gwadar and other coastal or border settlements depend on a combination of Iranian imports and domestic grid supply, leaving reliability tied to both cross-border arrangements and improvements within Pakistan’s transmission system.

Settlement of the $12 million arrears will remain important for maintaining the commercial relationship with the Iranian supplier. The longer-term outlook will depend on whether the instalment payments remain on schedule, the voltage-support study produces a workable solution and transmission upgrades reduce the continuing load-shedding and voltage problems affecting consumers in the region.