Iran’s rial devaluation against the US dollar is not expected to have a significant impact on the actual cost of electricity generated in the country, a deputy at Iran Power Generation, Distribution and Transmission Company said.
“Regarding the indigenization of power industry in Iran, domestic companies will not be affected very much by the fluctuations of the national currency against the US dollar,” Mahmoud Reza Haqifam was also quoted as saying by ISNA on Friday.
Haqifam added that the government has reassured power companies of meeting their US dollar needs at the rate of 42,000 rials, which will further help stabilize the actual cost of electricity.
The administration officially pinned the rate at 42,000 rials as of April 9 to put a stop to the rial's rapid devaluation.
Despite the government's intervention, no trade takes place at that rate in the open market. The open market has, in fact, turned into the black market ever since the Central Bank of Iran delegated bureaux de change's responsibilities to banks and deemed anyone engaging in open USD trading as "smugglers".
Today's atmosphere is reminiscent of the events of the fiscal 2012-13 when the rial experienced the same devaluation trend against USD.
According to the official, the actual cost of producing every kilowatt-hour of electricity was calculated at 960 rials (2.2 cents) by the Plan and Budget Organization in the past fiscal year (ended March 20).
“This is while the industry officials had announced that the cost was at 1,100 rials (2.6 cents) per kWh.”
Haqifam noted that the electricity price for subscribers has met a rise of 7% in the present fiscal, which will not have any marked influence in consumption patterns, as the rise is meager.
By reducing domestic consumption, the country can compensate part of its electricity shortages in the hot season, the official said in February.
To do so, Haqifam urged the need for cutting electricity subsidy and raising awareness about judicious consumption.
"As long as electricity prices are not modified, neither can we tackle the problem nor will people and industries alter their consumption patterns," he added.
According to the official, power is sold to subscribers at 1.4 cents per kWh.
Referring to Iran's high energy consumption rate that is reportedly 14 times that of Japan, Haqifam said if effective measures are not taken to restrain and reverse the current pattern of overuse, "we will face formidable challenges to generate energy for future generations".
