Iran Parliament Against Higher Water, Electricity Tariffs

EghtesadOnline: The parliament has rejected a proposal by the Energy Ministry to raise water and electricity tariffs, saying it is “against the law” as it will pile economic pressure on the people in the current dire economic conditions, Barq News reported.

News ID: ۷۴۷۳۰۶

12 May 2019

“Because of the difficult economic situation of the people, raising tariffs could lead to social protests. Any increase in tariffs is not acceptable,” Asadollah Qarehkhani, the Majlis Energy Commission spokesman, said.

The Energy Ministry should use the same electricity and water tariffs as last year and the Majlis opposes any hike for this fiscal year, he said.

Data released by the ministry show that among 200 countries, Iran sells the cheapest power on average after Egypt, Kuwait and Myanmar (Burma), according to Financial Tribune.

According to the news agency, power generation costs, including production and transmission, is 2 cents per kilowatt-hour. Electricity is sold at 0.7 cents per kWh and water for 10,000 rials (10 cents) a cubic meter, which is only 40% of the cost.

The government proposed the higher tariffs last year to compensate a part of its costs and encourage the people to consume less.

It sought to raise water and electricity tariffs by 7% for judicious consumers and 23% for those exceeding a certain consumption level.

Water, electricity, gas and gasoline are subsidized in Iran and successive governments have said that the prohibitive subsidies are not sustainable. The entire concept of subsidies has come under a very big question mark for years with proponents and opponents floating ideas and views that are poles apart.

Veteran economists and experts agree with government proposals saying so long as water and electricity prices are not adjusted upwards, the problem of overconsumption and waste will persist.

Regarding the cancellation of the government proposal, an energy expert voiced concern about the possibility of power outages in summer similar to the previous years due to overconsumption.

Javad Noferesti insists that 7% increase in electricity tariffs would add little to the bills and not pile pressure on consumers.

“Even the 23% hike in tariffs will not prevent the heavy consumers (comprising 30% of subscribers) from overconsumption,” he noted.

It would be better for the Majlis to cancel the 7% increase for subscribers who adhere to admissible consumption patterns and instead increase tariffs for heavy consumers up to 3 times.