Ali Kheradpir, Paris (Source: Mianeh)
industry troubled by huge government debts.
Damavand Power Plant
Iranians have been warned they face power blackouts this summer if the
government does not pay billions of dollars it owes to electricity generators
pay only a fraction of the real cost of power because of government-regulated
prices. The debt means that no one is willing to invest in new generating
capacity and companies in the associated equipment sectors have started folding.
warning of more cuts this summer came from Mohammad Parsa, board director of the
Iran Electrical Industry Syndicate, who said the government owes five billion US
dollars to the electricity supply industry and contractors and a further one
billion dollars in compensation for the delay in paying off the debt.
country has struggled with widespread power outages once before - in the heat of
the summer of 2008, when the government was forced to ration electricity in
major cities across Iran. Repeated power outages not only resulted in
frustration for Iranian citizens but also delivered a heavy blow to industry.
not threatening the government with blackouts. If we are not going to be paid we
will simply be unable to meet demand. Many electricity companies are already on
the verge of collapse," a syndicate board member said.
one company, Avanagan, the biggest producer of electricity transmission pylons
in Iran, has already shut down.
Energy Minister Majid Namjou has expressed the hope that the government will
manage power supplies in the coming summer. He has also announced that 500
million dollars has been allocated to clear some of the government's debt to the
most of the electricity generators are run by the government, the equipment
producers and contractors are generally from the private sector.
Mohammad-Ali Abbasi, the deputy head of industries at the Chamber of Trade,
Industries and Mining, has said that recurring power outages in 2008 cost
industry more than 230 million dollars.
government claimed in 2008 that the blackouts were the result of a drought
affecting the output of hydroelectric power plants. However, many experts
believed this was an excuse to draw attention away from the government's
mismanagement as hydroelectric power accounts for only ten per cent of the
country's electricity needs.
Iran is the biggest generator of electricity in the Middle East, its output does
not meet its growing consumer demand.
Iranian grid at present is able to deliver 40,000 megawatts, which according to
Deputy Energy Minister Mohammad Behzad is the expected peak consumption this
expert said a quarter of power output comes from worn-out plants, and the Majlis
Research Centre found that 23.5 per cent of the electricity generated goes to
waste in the transmission network. The World Bank has named Iran the number one
waster of electricity in the Middle East and North Africa.
country has very little spare capacity when consumption peaks. Former energy
minister Parviz Fattah put this reserve at 3 per cent, where it should ideally
be 25 per cent.
new power plants, renovating existing ones and developing the distribution
network all require funding and economic sanctions mean there is no foreign
investment in the sector. But the key issue is the low prices of electricity
fixed by the government and the subsidies paid to consumers, which have reduced
investor interest in the sector.
government has allocated 3.2 billion dollars for energy subsidies in the current
year. The Majlis, or parliament, has announced the real price of every
kilowatt-hour of electricity to be eight cents while the average price paid by
consumers is only 1.6 cents.
industry is only working at 20 to 30 per cent of its full potential. If it
worked at full capacity there would be severe power cuts already," an
electricity equipment producer said.
government wants to cut subsidies and eventually charge consumers the real cost
of electricity. Energy Minister Majid Namjou has announced that consumers will
soon be paying 4.3 cents per kilowatt-hour, but it is still unclear whether the
government is capable of carrying this out and facing the unpredictable social
an economic return, the private sector in Iran has no desire to invest in
increasing the country's electricity generating capacity. The government has
even promised to pay in advance for electricity generated by the private sector
but entrepreneurs seem to be more interested in venturing into international
international sanctions, Iranian electrical industry manufacturers have nearly
two billion dollars worth of export contracts. However, Parsa said the failure
to pay off the debts to the industry put this in jeopardy and put at risk the
jobs of more than 900,000 people working directly or indirectly for the
article is an abridged and translated version of the full original text
published on the Farsi pages of Mianeh, with editorial adjustments agreed with
the writer made to provide clarity for English-language readers.
About Mianeh: Mianeh is a new independent web-based initiative run as a
project by the Institute for War & Peace Reporting (iwpr.net)
the award-winning non-profit media development organisation that works across
the globe to platform local voices and promote international learning and
engagement. Mianeh aims to be an open space for ideas, news and debate where
writers in Iran can reach out to each other as well as to those outside the
country who are interested in learning more about the vibrant and dynamic
society that is Iran today.
... Payvand News - 04/20/10 ... --