Islamabad, Tehran to extend electricity supply agreement for Pakistan’s southwest

• Tariffs to remain between 7.7–11.45 cents/kWh as Islamabad seeks stability for energy-short border regions
• Iran currently powers Gwadar and other border towns where Pakistan’s national grid remains limited

ISLAMABAD: Pakistan and Iran have agreed to extend their cross-border electricity supply pact for the southwestern province of Balochistan, maintaining tariffs between 7.7 and 11.45 cents per kilowatt-hour, Pakistan’s energy ministry said on Tuesday.

The deal, first signed in 2002, underpins energy security for parts of southwestern Pakistan where the national grid remains underdeveloped and erratic supply has hampered both industry and residential consumption. Coastal towns like Gwadar and nearby Mand Town in Balochistan have for years relied on imported Iranian power as connectivity with Pakistan’s main transmission network is incomplete and local generation insufficient.

Iran currently exports 100 megawatts of electricity to Gwadar under a March 2023 agreement and could scale up deliveries once additional infrastructure is operational. In May 2023, Prime Minister Shehbaz Sharif and Iranian President Ebrahim Raisi jointly inaugurated the Polan–Gabd transmission line to enable another 100 MW of supply.

Energy ministry spokesperson Zafar Yab Khan confirmed the extension of the deal, saying it had been moved forward between the two governments.

“Yes, it is correct,” he told Arab News, adding that the revised agreement was expected to be placed before Pakistan’s Economic Coordination Committee (ECC).

However, the ECC, Pakistan’s top economic decision-making forum, did not take up the extension in its meeting on Tuesday.

Power trade between Iran and Pakistan has expanded gradually over two decades, with tariffs negotiated periodically to reflect fuel costs and cross-border infrastructure upgrades. In August 2023, the ECC approved amendments to a separate contract extending a 104-MW supply from Iran’s Jakigur district into Pakistan’s Mand town through December 2024.

Gwadar, a key node in the China-Pakistan Economic Corridor (CPEC), is expected to remain dependent on imported electricity until new domestic lines are completed, making continued Iranian supply critical for industries, port operations and basic household demand.