Why Iran is raising energy prices

Why Iran is raising energy prices

By Dalga Khatinoglu

Iran stopped allocating 60 liters of gasoline a month for private cars, saying that gasoline was eliminated entirely from its subsidized energy basket.

The limited subsidized gasoline price was 22 cents. There is about 2.1 billion liters of unused subsidized gasoline, while Oil Ministry warned that quota cards would expire on September 22.

Currently a liter of gasoline is sold at about 30 cents, while the premium gasoline price increased by 3 cents to 36.3 cents. The gasoline price in Iran is still less than regional prices.

Iran started elimination of energy subsides gradually in 2010, when the price of a liter of gasoline was ten times less than it is now.

Iran has increased the energy prices since late 2010 in two steps, but with a huge devaluation in the national currency (rial) the prices are still very low.

For instance a cubic meter of natural gas was sold for about 100 rials to the Iranian housing sector in 2010 while a US dollar was 10,000 rials, while currently the minimum gas price is 440 rials (for those who uses less than 250 cm per month) and the maximum price is about 18,000 rials (for those who uses 1,250 cm per month). However, currently a US dollar is sold at above 33,000 rials.

Iranian Oil Minister Bijan Namdar Zanganeh said last June "currently over $90 billon worth of liquid fuel is being consumed in Iran. He added that the government pays $80 billion of the mentioned figure".

Head of the Iran Energy Efficiency organization (IEEO), Hossein Sajjadi said May 24 that Iranians pay for the natural gas and electricity 12.5 times and 7 times less than global prices. A KWh of electricity costs (for those who uses less than 100 KWh in month) about 1.2 cent while the maximum price (for those who uses less than 600 KWh in month) is about 8.7 cent.

Runaway energy consumption

Iran's primary energy consumption increased from 1.6 billion barrels of oil equivalent per annum (OE/a) in 2010 to above 2 billion barrels of OE/a, of which about 22 to 25 percent of this figure is wasted without reaching any consumer.

The country is expected to face annual energy consumption growth of 5.4 percent in coming years.

Huge energy consumption in Iran exists while the energy efficiency rate is very low and the energy intensity is very high. For instance, the efficiency of Iran's thermal power plant, which shares above 80 percent of the total power generation (276 billion KHw) in Iran, is about 37 percent.

According to the latest official statistics, released by IEEO, Iran's energy intensity was 1.5 times more than the global rate. The energy intensity is calculated as units of energy per unit of GDP.

There is not any new report about the energy intensity rate in Iran, but the country's GDP has decreased from about $550 billion in 2011 to about $370 billion last year. On the other hand, the energy consumption increased significantly during this period. According to Iran's Energy Minister Hamid Chitchian's statement last year, the country's energy intensity was 4 times more than the global average.

According to official statistics, for every thousand dollar gross revenue gain, about 0.63 ton of oil equivalent energy is consumed in the country.

CO2 emission

Iran ranks 7th place in term of producing CO2 in the world. According to World Bank statistics, Iran produced above 0.6 gigatons of CO2 (GtCO2) in 2012, about 15 percent more than 2008, while the global figure was 32.3 Gt in 2012. There is not updated figures, but according to Iran's official statistics, some 0.56 GtCO2 of CO2 was produced in Iran during 2013, while power plants share 37 percent of this volume.

Iran's air is one of the most polluted, and ranked 12th (with 127 mg per cm in 2010) with four Iranian cities among the ten most polluted areas in the world, according to the World Health Organization, a United Nation's body.

Iran planned to decrease its primary energy consumption level to 1.148 billion barrels of OE in 2020 to save $449 billion by this date.

Iran needs a $192 billion investment to decrease its energy intensity rate by 50 percent (assuming a 6-percent GDP growth annually) to economize more than a total of $1,100 billion in next 15 years.

Air pollution costs the country $16 billion annually, according to the World Health Organization. Iran's last available statistics officially put the figure at $8 billion in 2011.

As low energy prices are the prime motive for Iranians using more energy without attempting to increase the energy efficiency, the government needs to increase prices to get rid of huge subsidy as well as pollution costs.

Edited by CN

Dalga Khatinoglu is an expert on Iran's energy sector, head of Trend Agency's Iran news service

Follow him on @dalgakhatinoglu

Subscribe to Trend in Google News! Subscribe
Cavushoglu, Blinken discuss situation in Azerbaijan and Armenia
Cavushoglu, Blinken discuss situation in Azerbaijan and Armenia
Armenia found itself in complete military-political isolation even within CSTO - Russian military expert
Armenia found itself in complete military-political isolation even within CSTO - Russian military expert
Putin discusses results of meeting with President of Azerbaijan Ilham Aliyev and Prime Minister of Armenia Nikol Pashinyan with Security Council
Putin discusses results of meeting with President of Azerbaijan Ilham Aliyev and Prime Minister of Armenia Nikol Pashinyan with Security Council
Loading Bars
Latest
World Bank backs using $280 mln in frozen aid funds for Afghanistan
Cavushoglu, Blinken discuss situation in Azerbaijan and Armenia
Alec Baldwin on fatal movie set shooting; ‘I didn't pull the trigger’
Afghanistan's GDP likely to drop 20 pct in one year: UN
UAE reports its first case of COVID-19 variant Omicron
Moderna exec says company could have Omicron booster ready in March
UN says international migration rose last year despite Covid-19 impact
Kyrgyz border service reports shots from Tajikistan
Bennett declares ‘Yamam’ Israel’s national counterterrorism force
Transport infrastructure in Karabakh to turn Azerbaijan into logistics hub between Central Asia and Europe – CAERC
Four injured after old WWII aircraft bomb explodes in Munich - police
1st US case of COVID-19 omicron variant identified - Fauci
OPEC can elect new secretary general in January 2022 — source
President Erdogan talks bilateral relations with Crown Prince of UAE
Georgia to receive special PCR tests to detect new Omicron variant of coronavirus
Qatar Airways to launch flights to Uzbekistan from Jan 17, 2022
Iran military clashes with armed men on Afghan border
Armenia found itself in complete military-political isolation even within CSTO - Russian military expert
Net foreign assets in Azerbaijan grow for 10M2021
New geopolitical situation in region opens way for Azerbaijan’s further development - ambassador
Ambassador of Kazakhstan expresses condolences to Azerbaijan due to helicopter crash
Azerbaijan working on reconstruction railway line which is part of Zangazur corridor (PHOTO)
SOCAR’s STAR refinery tests numerous types of crude oil
Azerbaijan considering sending medical workers of Baku clinics to district hospitals
Azerbaijan shares data on number of vaccinated citizens
Azerbaijan confirms 1,795 more COVID-19 cases, 1,967 recoveries
Azerbaijani National Depository Center opens tender to buy new generation security system
Georgia boosts honey exports
Solar PV growth to surpass wind in EU in 2021-2026
Servicemen injured in Azerbaijani helicopter crash talk about incident (PHOTO/VIDEO)
Turkmen company exports paper products to Uzbekistan, Turkey
Iranian companies express readiness to restore factories in Syria - minister
Azerbaijani, Armenian FMs to meet in Sweden
President Ilham Aliyev receives EU Special Representative for South Caucasus (PHOTO/VIDEO)
US Marshall Legacy Institute sends eight more mine detection dogs to Azerbaijan (PHOTO)
Iran’s Bahar Azadi gold coin price rebounds
Azerbaijani agency shares data for mine detection, clearing work in liberated territories
Central Bank of Azerbaijan opens tender to insure fixed assets
Azerbaijan’s 10M2021 oil exports to Spain revealed
Uzbek Statistics Committee shares data on volume of retail trade turnover
Georgian medics advise reconsidering COVID-19 passports issuance
Overview of Uzbekistan's volume of wholesale trade turnover dynamics between 2010-2020
Price indexes of construction, trade sectors at Uzbek stock exchange fall
Georgia, IMF discuss new co-op program
Prices for goods and services in consumer market of Uzbekistan rise
Turkey’s diesel fuel exports to Georgia down
Georgia, NATO discuss further co-op and Black Sea security
Iran bans import of musical instruments due to lack of foreign exchange resources
Turkmen ministry prolongs tender for supply of metal blanks
IRENEX shares data on sales of Tabriz Oil Refining Company
Activities in Iran’s Imam Khomeini port down
Star Refinery satisfies about quarter of Turkey's refined petroleum product needs - CEO
Kazakhstan’s oil and gas company opens tender to supply fittings
Mobile phones rank first in Iran’s total imports - IRICA
Turkmenistan’s education ministry extends tender for setting drip irrigation system
Oil minister tells president, parliament that Iran's oil exports 'significantly grow'
Azerbaijan, Pakistan talk prospects for development of military co-op (PHOTO)
Azerbaijan's SOCAR Polymer exports increase over 10M2021
Iran unveils volume of dates export
Iran’s CBI reveals data on balance of bank loans
EU to exceed current renewable capacity plans for 2030
Azerbaijan reveals oil exports to Italy in 10M2021
Azerbaijan shares data on oil export to Croatia in 10M2021
Baku Metro provides ‘November 8’ station with backup power supply (Exclusive) (PHOTO)
Renewable electricity generation to exceed average annual growth rate of 2015-2020
Expansion of bioenergy for power capacity to slow down
Renewable energy capacity to expand by 2026, says IEA
Azerbaijan talks ongoing work to provide electricity to liberated Lachin district
Special representative of Azerbaijan's President in liberated territories within Karabakh economic region appointed
German Ambassador expresses condolences to Azerbaijan over deadly helicopter crash
Iran, Syria sign four cooperation agreements
Iran to invest in Syrian industrial towns
Austria extends COVID-19 lockdown by 10 days
Branch of Azerbaijan’s Balakhani Operating Company opens tender to buy pipes, pumps
Baku electric company opens tender to buy materials for lamp posts repair
Organization of social zone of Aghdam Industrial Park completes in Azerbaijan – minister
Deputy Prime Ministers of Azerbaijan, Armenia and Russia to meet in Moscow today
Azerbaijan’s Azerishig opens tender for reconstruction of substation in Sumgayit
Kazakhstan increases trade with India over 9M2021
Nar continues to grow IT professionals (PHOTO)
India provides medical, humanitarian aid to over 150 countries to deal with COVID-19: MEA
Georgia receives COVID-19 support grant from German Development Bank
Turkey-Azerbaijan trade turnover grows in October 2021
Kazakhstan reports increase in maritime transport volumes
SOCAR Petroleum to open new petrol station in Azerbaijan’s Gubadli district
SOCAR Georgia Gas increases gas tariffs
Iran reveals COVID-19 data for December 1
Azerbaijan discloses data on oil exports to Israel
Georgian cities receive EU grant for cultural development
Saudi Arabia reports first Omicron case coming from north Africa
Georgian FM expresses condolences for lives lost in crash of military helicopter
PMO records increase in cargo movements in Iranian ports
Turkey’s BOTAS increases gas imports
Hungary launches Stipendium Hungaricum scholarship programm
Russia working out celebration program for 30th anniversary of ties with Azerbaijan - MFA
Burial ceremony of Azerbaijani helicopter crash victims held in second Alley of Martyrs (PHOTO/VIDEO)
Georgian Embassy expresses condolences to Azerbaijan on helicopter crash
Iran to prepare budget bill with highest economic growth estimates - President Raisi
Construction and installation work under completion at Azerbaijan’s Khojasan metro station (PHOTO)
Dynamics of OPEC+ production in 2021-2023
All news