The Oil Ministry’s proposal to spike natural gas tariffs in the household sector is expected to be ratified by the Cabinet, based on which the vital commodity’ price will rise by 40%, the oil minister said.
“The new rates were supposed to go into effect last year, but the Cabinet has not approved the proposal yet,” ISNA also quoted Javad Owji as saying.
Consumers who use up to 500 cubic meters of gas per month will be levied 0.2 cents per cubic meters.
As per the new proposal, those who exceed the limit will be charged 40% more for consuming every extra 100 cubic meters, he added.
Elaborating on the details, Owji noted that subscribers who consume 1,000 cubic meters per month will have to pay 0.7 cents per cubic meter and if monthly consumption surpasses 1,200 cubic meters, the National Iranian Gas Company will charge them 1.2 cents per cubic meters, meaning gas tariffs for such consumers will be 376% more compared to those whose monthly consumption is maximum 500 cubic meters.
High gas consumers constitute less than 25% of the total number of users but they gobble up 50% of total gas output supplied to households.
“Higher tariffs are aimed at compensating a part of production and distribution costs and encouraging subscribers to consume less,” he added.
Referring to the number of gas subscribers, the oil minister noted that more than 25 million consumers in 1,110 cities and 24,300 towns are supplied with natural gas and 75% of them (19 million) use gas within the acceptable limit (lower than 500 cubic meters per month) and are charged 0.5 cent per cubic meters.
“Nevertheless, six million subscribers exceed the limit and use 250 mcm of gas per day. They will be levied an additional charge, in the hope that they will amend their consumption patterns,” he said.
According to Owji, daily household gas demand surpassed 650 million cubic meters in 2021, showing a 40% or 140 mcm rise compared with the same period of 2020.
Energy experts believe that as long as prices are not adjusted upwards, the problem of overconsumption and waste will persist.
Iran is the fourth largest gas consumer in the world after the US, China and Russia.
The National Iranian Gas Company’s officials, including Managing Director Majid Chegini, believe that a rise in tariffs for heavy consumers is the most effective short-term solution to curb consumption.
Iran offers natural gas to households and businesses at highly subsidized rates, which experts blame for the illogically high level of gas consumption in the country.
Referring to massive subsidies paid to consumers, Chegini said households are normally charged less than $2 per month for consuming 500 cubic meters of gas.
“If the same volume of gas is exported, the company can earn at least $300,” he added.
