Iran: Red Flag for Gas Consumption

“Power is exported based on international norms and contracts that cannot be changed, suspended or revoked as per our wish and whim,” ILNA quoted Payam Baqeri as saying on Monday.

The Energy Ministry must be committed to its agreements and breaching the terms of agreement is defamatory. Winning the trust of customers’ confidence to renew the deals will be very difficult if there are supply disruptions, Financial Tribune quoted Baqeri as saying.

“Cutting gas export on the grounds of not having enough fuel to produce electricity (or for the matter any other excuse) is not justifiable,” he said, adding now that the country is saddled with US economic sanctions not respecting international trade deals will have irreversible consequences.

Turkey, Iraq, Pakistan and Afghanistan are importers of Iranian electricity. Under swap deals, Iran also exports electricity to Armenia and Azerbaijan in winter and imports when domestic demand soars in summer.

Iraq needs more than 23,000 megawatts to meet growing domestic demand. Years of war, internal strife, terror attacks and the bloody US invasion in 2003 destroyed its power infrastructure creating a massive 7,000 MW deficit.

Referring to the summer of 2018 when power exports to Iraq were cut due to high domestic consumption, the official said not only did it provoke unrest in some southern provinces, the Iraqis started negotiations with Saudi, German and the US to develop their broken electricity infrastructure and reduce their dependence on Iran’s gas and power imports.

The US granted Iraq a 45-day sanctions waiver last week enabling it to continue importing Iranian gas and electricity.

Now that the world is looking into Iran’s relations (especially with neighbors), cutting power exports could translate into inability to uphold international agreements and undermine Tehran’s foreign relations. 

According to Energy Minister Reza Ardakanian, suspending power exports is not an option as the ministry needs foreign currency to settle its debts to the National Development Fund of Iran, the country's sovereign wealth fund.

Power Outages

Mostafa Rajabi Mashhadi, the Energy Ministry spokesman for power affairs, said on Sunday, “The National Iranian Gas Company is not delivering enough feedstock (gas) to power stations. As a result electricity generation has declined and power outages have started.”

According to the official, most power stations have started to use liquefied fuel and daily consumption of mazut has surpassed 40 million liters.

Several power plants including Tous and Mashhad in Khorasan Razavi, Neka in Mazandaran, Shahid Rajaee in Qazvin, Sahand and Tabriz in West Azarbaijan are forced to use eco-unfriendly mazut to generate power and the consumption is expected to rise unless households realize the gravity of the situation and cut consumption.

As 95% of power plants depend on natural gas to generate power, not consuming gas judiciously will also have ecological consequences because more thermal power plants will have to switch to diesel and mazut instead of gas and in the process add to the already dangerous air pollution and CO2 problem.

The more liquid fuels are burnt (to produce electricity), the more toxic fumes will be released into the atmosphere making a bad pollution situation worse.

2.9b kWh Exports

Based on reports from the Statistical Center of Iran, Tavanir (Iran Power Generation, Distribution and Transmission Company) exported 2.9 billion kilowatt hours of power to neighbors between June and September 2019.

Although domestic demand also peaked in the same period (summer season), the sate-run company managed to hit a record on the export front.

The figure (2.9 billion kWh) was a rise of 190% compared to the corresponding period in the previous year. 

SCI said between September and December 2018, exports reached 1.4 billion kWh -- up 10% compared to the same period in 2017.

Tavanir sold 1.9 billion kWh of power between December and March, 2018 that was 400 million kWh more than the corresponding period in 2017.

Iran exported 2.1 billion kWh of electricity between March and June 2018.

Annual power generation in Iran is 77,000 MW and average annual export near 10 billion kilowatt hours, which can be increased if domestic subscribers consume power and gas prudently.