Energy Prices 12 Times Below Global Average

Energy Prices 12 Times Below Global AverageEnergy Prices 12 Times Below Global Average

Electricity and natural gas prices in Iran are approximately seven and 12.5 times lower than the global average, head of the Iran Energy Efficiency Organization, SABA, said on Saturday.

"Construction and power production are the two most energy-intensive sectors in Iran, consuming approximately 46 percent and 36 percent of the country's overall energy," Seyed Hossein Sajjadi was quoted by ISNA as saying on the sidelines of the 6th National Productivity Festival of Iran.

He underlined low tariffs as a major hurdle against the development of electricity and gas sectors.  "The launch of the subsidy reform plan partially helped curb power consumption, but as long as prices are low, consumers will have no incentive to improve [consumption] efficiency," the official noted.

Power consumption in Iran is three times higher than the global average, according to energy officials, and close to 31 million subscribers in residential and industrial sectors consume an estimated 200,000 million kilowatt-hour energy per year, or nearly two-thirds of electricity produced in Iran.

Preparing grounds for a competitive energy market, bolstering the private sector, removing energy subsidies and introducing tax-exemption programs are part of measures that can help increase efficiency, according to Sajjadi.

Under a five-year plan that started in December 2010, and promoted as an “economic revolution” by former president Mahmoud Ahmadinejad, Iran began slashing three-decades-old subsidies on sensitive energy and food items, replacing them with controversial cash payments.

Earlier this month, the Energy Minister Hamid Chitchian said Iranians have access to "the most inexpensive electricity in the world" at a rate of approximately 1.4 cent per kilowatt-hour (kWh).

According to a report published last year by the Statista research portal on global electricity prices in industrial countries, every kWh of electricity in the United States costs 10 cents, while consumers in Italy, Germany and the UK pay the highest with 21 cents, 19.2 cents and 15.4 cents per kWh respectively. Meanwhile electricity is relatively cheaper in Sweden, Finland and Canada at 7-8 cents per kWh.

Iran’s electricity industry ranks 14th in the world and first in the Middle East in terms of electricity generation with an installed capacity of 72,000 MW.

The country is the largest exporter and importer of electricity in the Middle East and exports electric power to Armenia, Pakistan, Turkey, Iraq, and Afghanistan. Azerbaijan and Armenia supply electricity to Iran under a swap agreement.