The only medium-term solution to cope with the electricity imbalance in Iran, where demand outweighs supply, is the liberalization of the electricity industry via the stock market, the deputy head of Iran Chamber of Commerce, Industries, Mines and Agriculture said.
“Institutions such as Tavanir are hindering the realization of this liberalization,” Payam Baqeri was also quoted as saying by the news portal of Tehran Chamber Commerce.
Operating under the Energy Ministry, Tavanir is a government-owned integrated energy utility that generates, transmits and distributes electricity.
In a recent meeting of the so-called Dialogue Council of Tehran Province, which was convened to discuss the issue of electricity, deputy governor general for coordination of economic affairs, Mohammad Ali Mehri, said the solution to cope with blackouts in the province is construction of small-scale power plants and development of solar power plants.
However, the question is to what extent the implementation of these programs possible and whether it could compensate the imbalance of electricity supply and demand, the news portal of TCCIM wrote.
Baqeri stated that solutions such as increasing the efficiency of power plants, converting the thermal power plant into a combined cycle and reducing losses could be implemented to compensate the imbalance of electricity.
“But all these measures need investments and in a situation where prices are fixed and the dues are not collected on time, investors will not show enthusiasm to establish such power plants, unless the government takes the initiative to
Serious Imbalance
The imbalance in the production and consumption of electricity has a long history in Iran and stems from a larger and more serious imbalance: the imbalance in the electricity industry.
“The problem is that due to a lack of resources in the past decade, investment in the electricity industry has not been made to the required extent, and the power plants and electricity production units have not expanded commensurate with the growth of electricity demand. Therefore, we are now witnessing an imbalance that has intensified in recent years,” the official said.
He noted that the outbreak of this imbalance had been predicted by the private sector and experts in the past.
“The private sector has warned over the past few years that if an urgent decision is not taken for the electricity economy, we will face a lack of resources in investment. The result is blackout!” he said.
Baqeri described the mandatory prices and the difference between the cost price of electricity and the selling price as the cause of weakening the balance in the electricity industry.
"Now we are witnessing that the most serious plan of the government to manage this situation has been the focus on demand side management and, of course, industrial consumption. In fact, for the continuation of electricity supply in the household sector, power cuts are implemented in industries, and when the industries are faced with limitations of the means of production, we must expect the effects of this limitation on the finished price of the goods and ultimately on macroeconomic indices,” he said.
“One of the most important solutions is to liberalize the electricity industry. Electricity producing units and power plants of the private sector can sell electricity to industries through the stock market. Upon this liberalization, resources will be released, which can be invested in the infrastructure sector of the electricity industry. This way, we will witness the reentry of investors into this field, which will in turn help balance the supply and demand of electricity.”
He explained that Tavanir is in the middle of this transaction as it buys electricity from power plants and sells it to the end user, therefore the government enforces its price control as a result of this mechanism, but the government does not want to lose this financial flow.
Emphasizing that the Energy Ministry and Tavanir show no interest in the implementation of this solution, he said if this does not happen, we cannot expect the electricity economy to achieve a balance.
“The only solution to this problem is for the government to distance itself from using its clout, which point has also been raised in the statements of the Leader of the Islamic Revolution,” he concluded.
