The National Iranian Gas Company has no plans to hike natural gas tariffs, but heavy consumers in the household sector will be imposed a surcharge as of Nov. 22, the oil minister said.
“Heavy consumers, who use more than 500 cubic meters of gas per month, account for less than 25% of total subscribers but they gobble up 50% of total gas output supplied to households,” Javad Owji was also quoted as saying by ISNA.
Referring to the number of gas subscribers, he noted that more than 25 million consumers in 1,106 cities and 24,260 towns are supplied with natural gas and 75% of them [19 million] use gas within the acceptable limit [lower than 500 cubic meters per month] and are charged 0.5 cent per cubic meters.
“Nonetheless, six million subscribers exceed the limit and use 250 mcm of gas per day. They will be levied an additional charge, hoping that they will revise their consumption patterns,” the minister said without providing details.
According to Owji, daily household gas demand has surpassed 500 million cubic meters, showing a 40% or 140 mcm rise compared with the same period of last year.
“Heavy consumers are putting a heavy burden on NIGC’S shoulder as they account for the lion’s share of gas consumption. Unless they rethink their usage patterns, the state-run firm will have no choice but to charge them more,” he said.
“No investment has been made to raise natural gas output over the last two years. Simply put, our production is as much as last year – 800 mcm/d – while demand has shot up by 12%, meaning gas shortage will be very likely in winter if households do not use the fuel wisely.”
Iran is the fourth largest gas consumer in the world after the US, China and Russia whereas its population is much less than that of those nations. That’s why NIGC officials, including managing director, Majid Chegini, believe that a rise in tariffs for heavy consumers is the most effective short-term solution to curb consumption.
Iran offers natural gas to households and businesses at highly subsidized rates, which experts blame for the illogically high level of gas consumption in the country.
Referring to massive subsidies paid to consumers, Chegini noted that households are normally charged $2 per month for consuming 500 cubic meters of gas.
“If the same volume of gas is exported, the company can earn at least $200,” he added.
Rising usage over the past winter forced NIGC to cut gas supplies to electricity stations across Iran, causing brief but recurrent power cuts in large cities.
Oil Ministry officials have warned there could be a shortage of nearly 200 mcm of gas in the coming winter, as demand is expected to increase by 12% year-on-year.
NIGC has the capacity to pump nearly 800 million cubic meters of gas per day to the national network.
