Call for Adjusting Water, Electricity Prices

Call for Adjusting Water, Electricity PricesCall for Adjusting Water, Electricity Prices

Water and electricity prices should be regulated annually by at least 5% above the annual inflation rate, Mohammad Parsa, head of the Federation of Iranian Energy Export Industries, said.

The parliament had approved a bill a few years ago to regulate water and electricity prices within a three-year timeframe. However, the plan was aborted following the imposition of tough sanctions against the Islamic Republic and the escalation of inflation rates during the tenure of former president Mahmoud Ahmadinejad, ISNA reported.

Parsa said a second plan was proposed to regulate the prices in a recent meeting between the government and private sector officials at Iran Chamber of Commerce, Industries, Mines and Agriculture.

The new plan calls for raising the water and electricity prices by 5-10% above the inflation rate in a window of three to seven years.

The FIEEI chief said the prices of these energy carriers should rise "at least on a par with annual inflation", otherwise the government would face budget deficit.

According to energy officials, water is a heavily-subsidized commodity and consumers pay only one-third of its real price in Iran.

"Increase in water prices will be in the public interest. We need to revise the tariff to curb drought in future," Parsa said.

"The price hike will also benefit the agriculture sector by forcing a move from traditional and heavily water-reliant methods of farming to the greenhouse farming method."

Iran is facing serious water scarcity due to overexploitation of water resources as well as drought and low precipitation.

Analysts say roughly 90% of the national water resources are wasted in the traditional agro sector, at a time when rainfall has reached its lowest levels in recent history.

Average rainfall is around 750 millimeters in the world, while Iran's average precipitation has fallen to 205 mm in the past 15 years, down from 250 mm before a long and hard drought cast a shadow over the country.

According to the Energy Ministry, water consumption is at a "reasonable" level by around 72% of consumers nationwide, and the ministry's plan to raise water tariffs is not aimed at generating profit, but to curb its wasteful consumption.

A 2013 study by the World Resources Institute ranked Iran as the world’s 24th most water-stressed nation, putting it at an extremely high risk of future water scarcity.

According to Energy Minister Hamid Chitchian, the government's policy to liberalize water and electricity prices is based on a gradual rise in tariffs to maintain the balance between revenues and costs.

Regulation of the tariffs has been stipulated in the Fifth Five-Year Economic Development Plan (2011-16), but the plan came to a halt when inflation rates skyrocketed in the previous Iranian administration.

Chitchian also described electricity in Iran as "the most inexpensive in the world" at a rate of approximately 1.4 cent per kilowatt-hour, while power consumption in the country is roughly three times higher than the global average.