20 May 2007 - 10:20
  • News Code: 105051

TEHRAN -- Energy Minister Parviz Fattah observed that the government and the Majlis have to revise electricity rates to plug the ministry’s budgetary shortfalls, especially in the electricity sector.

“Electricity charges for household consumption have to be increased to approximate cost prices,“ the minister stressed in an interview with Isna.

He recalled that in recent years, the government did not pay any fund to Iran’s Power Generation, Transmission and Distribution Company (TAVANIR). “Budgets earmarked by the government for TAVANIR were ’zero’ until recently and the company had to manage on its earnings from electricity charges.“

The minister contended this method is practiced by countries all over the world. The governments in the West not only pay no money to the electricity sector but also a portion of their revenues is supplied from electricity sale.

According to him, price of each kilowatt/hour of electricity is minimum 10 cents in European Union and 19 cents in other countries. Fattah put the figure at 150 rials (about 1.5 cents) in Iran which is way below the cost prices.

Consequently, deficits have to be compensated for by the government funds--a practice which the Ahmadinejad administration has continued in the past two years as well, he added.

The minister put state subsidies allocated for electricity sector at 5,000 billion rials during the year to March 2008.

“This is while the sector needs 40,000 billion rials of investments not to mention the money required for maintenance, fuel and repair costs as well as wages of administrative personnel. So, currently there is a gap between ministry’s incomes and expenditures.“

On strategies to resolve the problems, Fattah suggested that prices should be revised even if the revision contributes to inflation.

The minister recommended, “Even through the Majlis and the government are reluctant to revise the prices for certain reasons, they should pay the ministry the balance between energy production and sale prices.“

He noted that close to 20 percent of electricity is wasted in the country which is eight percent above global standard.

News Code 105051

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