Iranian Firm Upset about Unpaid Gwadar Transmission Line Project

The Iranian company contends that NTDC’s failure to release full payments stems primarily from the non-approval of the revised PC-1 (Project Concept-1) of the project.

In a recent development, an Iranian company has penned a letter to the government of Pakistan, expressing deep concern over significant delays in payments for its contributions to the construction of a crucial 220 kV transmission line connecting Iran to Gwadar, Pakistan. The delay has left the company grappling with financial constraints, with outstanding payments amounting to over Rs. 1 billion.

Sources close to the matter disclosed that the National Transmission and Dispatch Company (NTDC) had initially contracted the project to the Iranian company, Sunir, to import an additional 100MW of power from Iran. Despite the project’s importance, payment delays have strained relations between the involved parties.

The project’s timeline saw its inception with groundwork initiated by the Iranian company ahead of the official contract amendment signing, at the direction of Pakistan’s Prime Minister. Subsequently, on May 18, 2023, the project was ceremoniously inaugurated by the Presidents of Iran and Pakistan. Since then, the Gwadar transmission line has been operational, effectively facilitating energy exchange between the two nations.

However, despite the timely completion of the project by July 13, 2023, well within the specified deadline of October 4, 2023, payment issues have arisen. NTDC has reportedly halted payments totaling €5.299 million, with an additional Rs. 36.1 million yet to be disbursed.

The Iranian company contends that NTDC’s failure to release full payments stems primarily from the non-approval of the revised PC-1 (Project Concept-1) of the project. Emphasizing the responsibility of the project sponsor to complete regulatory formalities prior to project initiation, the company expressed frustration over the lingering payment delays despite repeated written requests and numerous meetings.

Consequently, the Iranian company finds itself in a precarious financial situation, exacerbated by the non-receipt of rightful payments for completed work. In light of this, the company’s letter to the Pakistani government urges immediate action to address the outstanding payments and alleviate the financial strain imposed on the company.

The delay in payments not only affects the Iranian company but also raises concerns about the broader implications for bilateral cooperation between Iran and Pakistan. The successful completion of infrastructure projects, such as the transmission line in question, relies heavily on mutual trust and adherence to contractual agreements.

As both countries strive to enhance energy connectivity and foster economic development in the region, timely resolution of payment disputes becomes imperative. Failure to address these issues promptly could jeopardize future collaborative endeavors and undermine the long-standing partnership between Iran and Pakistan.

In response to inquiries regarding the payment delays, NTDC officials have yet to issue a formal statement. However, stakeholders on both sides anticipate swift action from the respective governments to mitigate the financial strain on the Iranian company and uphold the integrity of bilateral agreements.

As the situation unfolds, stakeholders closely monitor developments, hopeful for a resolution that ensures the continuation of mutually beneficial cooperation between Iran and Pakistan in the energy sector.