Challenges of Iranʹs energy conversion agreements in future competitive market

Extensive need for electricity and lack of enough governmental resources for the development of related infrastructures forced the Iranian Government to invite private investors and to sign Energy Conversion Agreement (ECA) in the form of build–operate–transfer (BOT) and build–operate–own (BOO) contracts with them. Accordingly, electricity purchase would be based on a guaranteed price. Changes in some laws in 2007 caused the management of the ECAs and electricity purchase based on guaranteed price to face challenges. Shortening the commercial operation period of the earlier ECAs and signing some new short-term ECAs were the steps taken by the authorities to resolve the problems.By shortening the ECAs’ commercial operation period, it is likely to cause serious problems concerning the payments of the project companies, because of shortages in the governmentʹs financial resources. The findings of the present viewpoint suggest signing of new long-term contracts (20 years long) in the form of a combinational agreement for buying the produced electricity with a guaranteed price (in the first 5 years) and supplying it in the competitive power market (for the following years) would be a better way to reduce the problems.