The government has approved the Oil Ministry’s proposal to hike natural gas tariffs in the household sector, based on which the vital commodity’ price will rise on average by 50% for heavy consumers compared to last year’s tariffs, the head of the National Iranian Gas Company said.
“The new rates will go into effect on Dec. 11. Higher tariffs are aimed at compensating a part of production and distribution costs and encouraging subscribers to consume less. Heavy consumers, who use more than 500 cubic meters of gas per month, will be levied heavy fines,” Majid Chegeni was also quoted as saying by ISNA.
Imprudent gas customers account for less than 35% of the total number of users, but they gobble up more than 50% of the total gas output supplied to households.
“Consumers who use up to 300 cubic meters per month were charged less than 1 cent per cubic meter on average between November and March [cold season] and tariffs rise by 20% between April and September [hot season],” he said.
As per the new directive, those who consume less than 300 cubic meters of gas per month will not witness any changes in their tariffs, but those whose monthly consumption exceeds this volume will be charged 50% more compared to the first group, he added.
The NIGC chief said households using more than 500 cubic meters per month will be levied 16 cents per cubic meter.
Referring to the number of gas subscribers, he 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 300 cubic meters per month) and are charged about 1 cent per cubic meter.
“Nevertheless, six million subscribers exceed the limit. They will be levied more, in the hope that they will amend their consumption patterns,” he added.
According to Chegeni, daily household gas demand has surpassed 550 million cubic meters, showing a 40% or 140 mcm rise compared with the same period of last year.
Overconsumption
Energy experts, including the NIGC chief, 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 Iran has the lowest population.
Chegeni also believes 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, Chegeni 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 could earn at least $200,” he added.
Rising consumption over the past winter forced NIGC to cut gas supplies to electricity stations across Iran, and the same is happening this year.
The NIGC chief said that of the total daily gas production of 1 billion cubic meters, 60% are used at homes, which is a massive volume and it will soon reach 70%.
“The national grid is stable and measures have been taken to prevent gas pressure reduction or supply interruption,” he added.
According to the official, heavy household consumption is taking its toll on industries, power stations and petrochemical plants, as they are being gradually cut off from the national grid.
Home Temperature
Chegeni said if subscribers cut home temperature by 2 degrees centigrade, as much as 50 mcm of gas can be saved daily, which is equivalent to the gas produced in two phases of the giant South Pars Gas Field per day.
Almost 40% of gas in the Middle East are consumed in Iran, an unreasonably high level by any standard. The residential sector is the largest consumer followed by power plants and petrochem companies.
With a population of 85 million, Iran burns more than 140 billion cubic meters of gas annually, not far from China, the world’s second-largest economy and the most populous country in the world, which consumed 191 billion cubic meters in 2015.
NIGC has raised gas production, especially from South Pars in the Persian Gulf, to meet the growing needs of power plants. However, the household sector’s demand is so high that gas delivery to power plants has to be cut sooner or later.
While average global gas consumption has risen by 2% in the past three decades in Iran, demand has hiked by a massive 4% during the same period.
"Such consumption patterns must change, or else there will another energy crisis,” experts have regularly warned.
