Government debt to the Energy Ministry related to the disparity between real water and electricity rates, which include distribution, transmission and generation costs, and what consumers actually pay, has reached a whopping $2.6 billion, Energy Minister Reza Ardakanian said.
"Besides the government, state-organizations, especially those affiliated to the armed forces, are not only heavily indebted, they also refuse to repay," he said, IRNA reported on Tuesday.
Ardakanian added that due to the huge gap in the real energy costs and the bills sent to consumers, the government pays at least $500 million in subsidies per annum.
Unlike households, a large number of state companies are apparently not committed to paying their water and electricity bills on time, the state news agency quoted the minister as saying.
Ardakanian revealed that his ministry owes almost the same amount ($2.6b) to private sector contractors who long back completed their work but have not been paid.
"There are an estimated 750 water and power plans, worth $13 billion pending and cannot be completed unless the contractors are reassured that they will be paid," he said.
He noted that back payments still not cleared for electricity purchased from power stations are another major challenge and considering its exponential growth, the money should have been paid much earlier.
It is often reported that private companies are compelled to borrow at high rates from banks to meet expenditures and repay debts while the ministry does not provide any compensation for delayed payments.
Given the outstanding government debt to the ministry, the ministry's debt to private companies and such companies huge debt to banks, Ardakanian said a trilateral deal involving the government, private companies and banks can help ease the overall debt burden. He did not provide details nor say who would repay whose debt.
The government in the past has tried to gradually repay its colossal debt of $122 billion to contractors by issuing Islamic Treasury Bonds and different types of sukuk.
According to Central Bank of Iran data, private sector debt to the banking system is estimated to be in the region of $30.3 billion.
With the pressing need to augment power generation capacity by at least 6% a year, huge investments are needed to meet the higher production targets.
However, the present economic climate discourages private investment, putting at risk future power supply, especially in the industrial sector, the minister warned.
