Economy, Domestic Economy

Need for $50b to Avoid Blackouts

Need for $50b to Avoid Blackouts
Need for $50b to Avoid Blackouts

Experts believe at least $50 billion in investment is needed if the government is going to avoid more frequent blackouts in large cities.

Power authorities face many challenges, especially in summer months to provide electricity, to millions of families. They often call on metropolitan citizens to reduce electricity consumption to prevent blackouts.

Alireza Kafshkanan, power committee secretary of the union for construction contractors told Eghtesad News that large investment in the sector can help it exit current recession.

“To allow the economy to move out of recession, we need to see how the power sector can step out of recession first,” he noted, referring to an 18-month plan recently introduced by the government to make the economy grow while trying to keep inflation as low as possible at the same time. “And then we must see how this vital sector can bring improvement and lead all other sectors out of recession.”

Kafshkanan said he believes that “electricity is a fundamental part of all industries.” He said if the sector can exit recession, it could help the whole economy out of its current trouble.

“If authorities want to approach the strategic targets of the 20-Year Vision Plan (set for March 2025), they need to invest $50 billion in the power sector. If such an investment is not provided, power generation will decrease resulting in more frequent power outages.”

The expert said the recent peak of power consumption in the country reached 50,000 MW, which shows a 10 percent hike compared to previous years’ statistics.

Iran needs to generate an additional 40,000 MW of electricity in the next 8 years, officials have said.

An injection of liquidity into the power industry by the previous administration was not effective, Kafshkanan said, urging the Rouhani administration to be more careful in allocating the funds.

He also blamed high interest rates for causing a return of liquidity from the production sector to banks.

The Central Bank of Iran and the government have recently announced that they are working on plans to further reduce banking interest rates, in an attempt to encourage investment directly in industries or in the capital market.

Kafshkanan concluded that the private sector has great potential to expand the power sector, stressing that such potential must be used to improve the clean energy production, as well.