The Oil Ministry’s proposal to hike natural gas tariffs in the household sector has been ratified by the Cabinet, based on which the vital commodity’ price will rise on average by 40%, a spokesman for the National Iranian Gas Company said.
“The new rates will go into effect on Nov. 27,” the Oil Ministry’s news portal also quoted Mohammad Asgari as saying on Friday.
“Heavy consumers, who use more than 500 cubic meters of gas per month, will also be levied heavy fines,” he added, but did not elaborate.
Imprudent gas customers account for less than 25% of the total number of users but they gobble up 50% of total gas output supplied to households.
“Consumers are currently charged 2.5 cents per cubic meters on average between November and March [cold season] and tariffs rise by 20% to reach 3 cents between April and September [hot season],” he said.
“Higher tariffs are aimed at compensating a part of production and distribution costs and encouraging subscribers to consume less.”
Referring to the number of gas subscribers, Asgari 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,” the spokesman said.
According to Oil Minister Javad Owji, daily household gas demand has surpassed 650 million cubic meters, showing a 40% or 140 mcm rise compared with the same period of last year.
Energy experts, including Owji, 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 whereas
For the same reason, 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 $3 per month for consuming 500 cubic meters of gas.
“If the same volume of gas is exported, the company can earn at least $200,” he added.
Rising usage over the past winter forced NIGC to cut gas supplies to electricity stations across Iran, and the same is happening this year.
