Ministry Wants Higher Price For Water, Electricity

Ministry Wants Higher Price For Water, Electricity
Ministry Wants Higher Price For Water, Electricity

The ministry of energy has proposed hikes in the price of water and electricity, it was announced late Saturday.

"Because of the substantial gap between the cost price of water and electricity and the revenues generated from the sale of power and water, the industry is facing problems," Minister of Energy Hamid Chitchian said, ISNA reported. On the sidelines of a conference in Tehran attended by senior advisors in the key industry, the minister told reporters that "the mere fact that the proposal has been made by the ministry is not very significant. It must (also) be approved by the government and eventually ratified by the lawmakers."

Illustrating the huge costs incurred by the government to produce and supply electricity, Chitchian last month had appealed to the people to reduce electricity consumption.

"The fuel cost of producing every kilowatt hour of electricity is 7000 rials, add to this 850 rials for energy conversion, transportation and distribution. The total cost is 7850 rials for one kwh .Of this amount consumers hardly pay 494 rials," he said during a tour of Khorasan Razavi Province. Complaining about the un-sustainability of current subsidies for water/electricity and high consumption patterns of Iranian households, industries and other power-intensive sectors, the minister said "That is why electricity companies are on the verge of bankruptcy."

Chitchian acknowledged that the situation is simply not acceptable and needs major overhaul because "paying such subsidies would indeed be tantamount to irresponsibility toward future generations."

A water crisis in Iran has caused serious concern both among the people and officials and the latter have almost daily called on the former to reduce consumption. In this area too, the problem is seemingly the low price of water, prohibitively high consumption plus huge wastage by the agro sector.

Time and again water experts have called on the government to introduce measures to help curb high consumption. One of the proposals calls for raising prices to help ensure water security and quality. This summer water supply to several thousand households in Tehran was cut for a few days because of high consumption and their refusal to comply with repeated government appeals to consume less. Regarding debts his ministry owes to the private sector, the official said according to the Fifth Five-Year Economic Development Plan (2011-2016) "if the government obliges an economic entity to sell its goods/services at lower prices, the difference is compensated by the government. However, this rule of law was ignored in the previous years (before the Rouhani administration took the helm in the summer of 2013). He did not provide any figures for the debts. Chitchian reiterated that his ministry is moving in line with the 'resistance economy' and is trying to improve the two important services (water and electricity) to the nation with the help of quality management and possibly price reforms. The need and significance of the economy of resistance was first proposed by the Leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei in 2010, as an austerity measure and instructed the then government to restructure the economy.

In line with the recently proposed changes in water/electricity tariffs, there also is the need for "efficient policymaking," Sattar Mahmoudi a deputy to the energy minister told the reporters. "More than 92 percent of water networks, 72 percent of plans for water supply, and 40 percent of wastewater projects have been implemented in rural areas, and issues related to funding, regulations, and feasibility of irrigation and drainage networks have been proposed in next year's budget plan."    

He added that 3,000 water and wastewater projects have been carried out by the private sector in the provinces.