Article 5 of supporting law of electricity of the country

Article 5 of supporting law of electricity of the country

20 May2017

The government is obliged to foresee the toll of consumption of each KWh electricity for providing a portion of required monetary resources in annual budget over implementing of the development and maintenance of rural grids and generation of electricity from renewable and clean sources. The acquired money would be deposited to the national treasury, Tavanir Company and 100% of it will be allocated only to implement the mentioned projects. All ministries especially petroleum and energy and all the subsidiaries companies are allowed to conclude contracts of 100 billion dollars (currency), 500,000 billion Rials which is adjusted with the inflation rate of the last year. Real or legal person, foreign or local with the priority of private sector cooperation to produce, export, improvement of quality, saving, decreasing the cost of product or service, environment improvement and decreasing financial losses. The government is obliged to: 1) Purchase the product or service 2) To pay all the profit of investment, governmental rights, regulatory tolls and other costs subject to the article. In case of financing of all or part of the required sources of parts 1 and 2 from the whole budget of the country if will be done by exchanging an agreement between management and planning organization of the country through the national treasury. A) Energy efficiency projects in different sectors: industry with the priority of energy consumer, public railroads and suburban, building, renewable energy deployment, promoting the use of compressed natural gas with the priority of big cities and main roads, production and replacement of high consumption and old vehicles with low consumption or electrical vehicles, reduction in cost of loads, railroad transportation, sea and air routes including infrastructure, projects which lead to mitigation of green gas houses, machinery and agriculture manufacturing units. B) Power plant construction projects with high efficiency, increase in production and efficiency of power plant that lead to the increase in thermal efficiency with the priority of installing the gas in CHP, coldness and heat (CCHP), Distributed Generation (DG), decrease in loss of energy in production, transmission and distribution, optimizing and energy saving in electricity and energy consumption, electrifying agriculture wells with the priority of using renewable sources such as solar, replacement of gas and petroleum products with electricity in areas that is economically feasible.

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Energy Strategic Planning

Energy Strategic Planning

20 May2017

Despite its focus on the development hydrocarbon sector, Iranian lawmakers have prioritized the reduction of CO 2 emissions and the development of renewable energy resources as key goals within the framework of the fifth five-year development plan - with a target of 5000 MW of installed capacity from renewable power plants in the short term. In the long term, the Iranian Government (the "Government") hopes to increase the nominal capacity of all power plants from 74 GW to over 120 GW by the end of 2025, in which a portion is determined to be derived from renewable resources. In order to drive the country's growth in this sector, the Renewable Energy Organization of Iran (SUNA) was established in 1996 to evaluate the county's renewable energy potential, to implement renewable energy projects, and to guarantee the purchase of any electricity generated in order to attract private sectors' participation in this field. Today, SUNA is a company affiliated to the Ministry of Energy and tasked with all matters related to renewable energy. The Government is now seeking to capitalize on its vast potential by bringing in further private investment and is therefore offering substantial incentives for such private investors. SUNA provides power purchase agreement (PPA) model to be entered into with the private investor which guarantees electricity purchase for 20 years. The investor has the option to sell the electricity within the country to third parties, on the energy exchange market or any other method acceptable to the Ministry of Energy. Even though the model PPA needs certain improvements to ensure its bankability and in particular the incorporation of robust change in law provisions, arbitration as the dispute resolution mechanism, and indemnification in case of early termination, it still constitutes an important step towards understanding the international market. SUNA recently adjusted the guaranteed electricity purchase tariffs as follows: Development of the renewable energy project in Iran Even though SUNA is making impressive efforts to facilitate and standardize the development of renewable energy projects, there are currently limited precedents available. According to the officials and based on the few projects that do exist, the development of a renewable energy project is undertaken as follows: Protection of foreign investments: Subject to the satisfaction of the conditions set therein, the foreign investor developing a renewable energy project may enjoy certain protections provided under the Foreign Investment Promotion and Protection Act ("FIPPA") which is the main legislation for the protection of foreign investments. In accordance with FIPPA, foreign investors are defined as non-Iranian natural and/or legal persons or Iranians using capital with foreign origin, who have obtained the FIPPA investment license. Issuance of the investment license is subject to fulfillment of the requirement that the foreign investment should contribute to economic growth, upgrade technology, enhance the quality of products, and contribute to an increase in employment, opportunities and exports. Foreign investments fulfilling the criteria set out in the FIPPA are guaranteed the same rights, protections and facilities as those available to local investments. Protection against expropriation or nationalization is guaranteed, unless in the "public interest", by means of a due legal process, in a non-discriminatory manner and in exchange for payment of appropriate compensation on the basis of real value of the investment immediately before the expropriation decision is taken. The profit derived from the foreign investment can be transferred abroad after deduction of taxes, dues and statutory reserves and upon the approval of the Foreign Investment Board and confirmation of the Minister of Economic Affairs and Finance. Furthermore, the issue of entry visas, residence and work permits for foreign personnel is facilitated by the FIPPA. Any disputes arising between the Government and foreign investors in relation to their mutual obligations under FIPPA are subject to the jurisdiction of Iranian courts, unless another dispute resolution mechanism is available through a bilateral investment treaty with the relevant government of the home jurisdiction of the foreign investor.

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Foreign Investment Promotion and Protection Act (FIPPA)

Foreign Investment Promotion and Protection Act (FIPPA)

20 Apr2017

The main Iranian foreign investment law is the Foreign Investment Promotion and Protection Act (FIPPA). The FIPPA grants foreign investors the same rights, protections and facilities available to domestic investors. This includes permission for investment in all fields where private sector activity is allowed and permission to hold up to 100% of shares in Iranian legal entities. Protection against expropriation and nationalization is guaranteed except where public interest reasons apply, in which case the expropriation should follow a non-discriminatory procedure and the investor should obtain compensation based on the real value of the investment. Moreover, the FIPPA includes provisions to ensure free transfer of foreign capital and profits of foreign investment abroad. Foreign investors may claim through the Act to convert Iranian Rial and to acquire necessary foreign currency for such transfer. Furthermore, residence and work permits for foreign personnel are facilitated under the FIPPA. The FIPPA defines a foreign investor as any non-Iranian or Iranian individual or legal entity utilizing capital of foreign origin, provided it has obtained the relevant investment license. Foreign capital is defined as being all types of capital, including cash or in kind that has been imported into Iran. To obtain an investment licence, an application has to be made to the Organization for Investment, Economic and Technical Assistance of Iran (OIETAI).

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Supporting Law of Electricity of the Country

Supporting Law of Electricity of the Country

20 Apr2017

The government is obliged to foresee the toll of consumption of each KWh electricity for providing a portion of required monetary resources in annual budget over implementing of the development and maintenance of rural grids and generation of electricity from renewable and clean sources. The acquired money would be deposited to the national treasury, Tavanir Company and 100% of it will be allocated only to implement the mentioned projects. All ministries especially petroleum and energy and all the subsidiaries companies are allowed to conclude contracts of 100 billion dollars (currency), 500,000 billion Rials which is adjusted with the inflation rate of the last year. Real or legal person, foreign or local with the priority of private sector cooperation to produce, export, improvement of quality, saving, decreasing the cost of product or service, environment improvement and decreasing financial losses. The government is obliged to: 1) Purchase the product or service 2) To pay all the profit of investment, governmental rights, regulatory tolls and other costs subject to the article. In case of financing of all or part of the required sources of parts 1 and 2 from the whole budget of the country if will be done by exchanging an agreement between management and planning organization of the country through the national treasury. A) Energy efficiency projects in different sectors: industry with the priority of energy consumer, public railroads and suburban, building, renewable energy deployment, promoting the use of compressed natural gas with the priority of big cities and main roads, production and replacement of high consumption and old vehicles with low consumption or electrical vehicles, reduction in cost of loads, railroad transportation, sea and air routes including infrastructure, projects which lead to mitigation of green gas houses, machinery and agriculture manufacturing units. B) Power plant construction projects with high efficiency, increase in production and efficiency of power plant that lead to the increase in thermal efficiency with the priority of installing the gas in CHP, coldness and heat (CCHP), Distributed Generation (DG), decrease in loss of energy in production, transmission and distribution, optimizing and energy saving in electricity and energy consumption, electrifying agriculture wells with the priority of using renewable sources such as solar, replacement of gas and petroleum products with electricity in areas that is economically feasible.

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