Private investment in the loss-making power sector is almost zero, deputy head of the board of directors of the Power Generation Companies Syndicate said.
“Lack of investment in the key industry will be catastrophic in the near future. Come 2023 nationwide outages will become a permanent feature,” Ebrahim Khoshgoftar was quoted as saying by Barq News website.
It seems the government is undecided or confused, he added, about redefining electricity as a commodity (requiring minimal government intervention in the market beyond measures to ensure fair competition) or a social service (requiring government to intervene or even control delivery systems, he said.
“So long as electricity is not recognized as a commodity (like oil and coal) which can be bought and sold by private firms this strategic industry will not flourish.”
Treating power as a commodity (with some limitations) is possible as it is traded in many other countries like India, Russia, Japan, Hungary, China and Turkey.
It is regrettable that the government is not in favor of letting competitive electricity markets take root that can contribute to efficiency of supply systems.
Referring to the age-old policies of government intervention in almost all key sectors, he said state-operated power plants receive free gas and obviously do not care how much each kilowatt of power is sold for. But privately-owned power stations have to pay 20 cents for each cubic meter of gas and the Power Generation, Distribution and Transmission Company (Tavanir) decides tariffs and also how and when plants should be disconnected for routine maintenance.
“Promises given to the private companies have been hollow and they are still not allowed to export electricity. Tavanir’s absolute monopoly cannot be broken easily.”
In his view “It is not for the government to balance energy demand and supply. Their task is rather to set a framework which can and will ensure energy is produced and consumed efficiently.”
Daily power generation is 60,000 MW and average annual export is 10 million kilowatts to Iraq, Pakistan and Afghanistan.
Effective Measures
Reza Haddadian, a member of the syndicate, said the future of the power industry is in jeopardy unless effective measures are taken to address the problems in the key sector.
Private sector investment in the power industry is said to be near $22 billion and 54% of the power demand is met by private producers.
“Failure to adopt new policies [allowing private companies to sell electricity directly or raise tariffs] is undeniably discouraging. This is why private companies are not interested in new projects.”
Government investment in the sector is out of the question as the economy stutters due to the huge decline in oil exports, the ballooning budget deficit and the US economic siege that have cut off foreign investments in all major industries.
According to Mostafa Rajabi Mashhadi, the Energy Ministry spokesman for the power department, consumption in Iran grows between 5% and 6% per year but expansion plans have been undermined due to financial constraints, management issues and energy subsidies.
“The Energy Ministry repaid $900 million in debt to private contractors in 2019 but still owes $2.5 billion.”
Referring to subscribers’ debt to the Tehran Regional Power Company, he said it is $17 million, a big part of which are bills unpaid by state companies and organizations. He did not name names nor say why the debts were pending.
