Iran will resume power exchange with Turkey in the near future based on a back-to-back letters of credit system, Iran’s energy minister said.
“The system has made it possible for the two sides to trade off close to 600 megawatts of power on a daily basis,” Ali Akbar Mehrabian was also quoted as saying by IRNA.
Under a new swap deal, Iran is expected to export 600 MW of electricity to Turkey in winter every day and will import the same volume when domestic demand soars in summer, he added.
Back-to-back letters of credit consist of two letters of credit (LoCs) used to finance a transaction. A back-to-back letter of credit is usually used in a transaction involving an intermediary between the buyer and seller, such as a broker, or when a seller must purchase the goods it will sell from a supplier as part of the sale to his buyer.
Iran suspended power export to Turkey in 2016 over financial disputes, he added.