Plan to Raise Water, Electricity Prices Criticized

Plan to Raise Water, Electricity Prices CriticizedPlan to Raise Water, Electricity Prices Criticized

The government has been mulling plans to raise water and electricity tariffs, and also cut supplies of the same to high consumers. However, these plans have sparked criticism from analysts and state officials.

Mohammad Sadat Ebrahimi, a member of Majlis Agriculture Commission, slammed as "inappropriate" the government's scheme to triple water tariffs, ISNA reported on Wednesday.

"Per capita consumption of water in Iran is high, but raising prices is not a reasonable measure to lower consumption," he said, adding that a similar plan was carried out to lower gasoline consumption, but the goal was never achieved by cutting subsidies and increasing its price.

Ebrahimi stressed that water is a vital commodity and the government "cannot play around" with tariffs, since a majority of people believe water is already overpriced.

He questioned the Energy Ministry's criteria for price hikes and stressed that "even overconsumption is not a proper reason" to ramp up tariffs.

Ebrahimi called for taking other measures to curb water consumption, including saving water from dilapidated supply networks by curbing wastage, using new technologies and equipment, separating drinking and non-potable water resources, and acculturation of judicious consumption.

Masoud Khansari, head of Tehran's Chamber of commerce, was next in line to oppose the price hikes.

He said water and electricity sectors are monopolized by the Energy Ministry, hence it cannot unilaterally increase water and power tariffs.

"In an open market, prices are determined by competition, but in a monopolized market, price-setting is influenced by a variety of factors," he said.

Khansari noted that prices must be consistent with production costs and the extra expenditures of ministries and government organizations should not be placed on the shoulder of people.

  Proponents of Price Hike

Despite facing a backlash from public and private sectors, the authorities say subsidy cut on water and electricity is inevitable, as the government slashed gasoline subsidies earlier this year.

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

Energy Minister Hamid Chitchian says subsidized water comes at an approximate cost of 20 cents per cubic meter, but consumers in urban and rural areas only pay 10 cents and below 10 cents respectively.

Chitchian also branded 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.

In a conference on engineering and management of infrastructures on Tuesday, Chitchian censured the national subsidy plan and said energy subsidies have prevented the government from tapping the huge potentials of the water and electricity sectors.

"A major research and industrial evolution will occur in Iran if subsidies are regulated," he said.

Under a five-year plan 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 disputable cash payments to the poorest of the population.

Earlier this week, Mohammad Parsa, head of the Federation of Iranian Energy Export Industries, called for raising water and electricity prices annually by at least 5% above the annual inflation rate.

Parsa announced that the government is working on a new plan that calls for raising the water and electricity prices by 5-10% above the inflation rate over three to seven years.

Officials say the price hike is not aimed at generating profit, but to curb wasteful consumption.

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

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.