Hike in water, power prices earns govt $5b
The minister of energy stated that the government will make $4.9 billion revenues from the hike in water and electricity prices in the country.
Majid Namjou told the Mehr News Agency that the first stage of the implementation of the subsidy reform plan covers 25 percent of the true cost of water and 45 percent of the true cost of electricity.
He claimed that only 30% of the government's income in this regard will be returned to the energy ministry.
The implementation of the subsidy reform plan began on December 19, in line with a directive issued by President Mahmoud Ahmadinejad.
International observers say the implementation of such a major economic plan indicates that the international sanctions against Iran have not been able to hinder Iran's progress.
"The subsidy reform plan is the largest economic plan the country has ever devised and will pave the way for a booming economy," Ahmadinejad said.
"The country's wealth and energy belongs to the people, and the optimal situation will be created when people participate in the management of the national wealth and the country's affairs," he added.
Ahmadinejad also said that the plan can be revised if the country faces major problems during the implementation of the subsidy reform plan.
The subsidy reform plan calls for the subsidies on fuel, electricity, and certain goods to be cut over the course of five years. The administration has decided to pay cash subsidies for an undetermined period of time to compensate low-income families for the inflationary repercussions of the plan.
The initial stage of the plan started last month when the administration began depositing cash payments into the bank accounts of citizens. Then it was announced that the main stage of the plan would come into force by November 22, but the administration decided to delay implementation of the plan by about one month.
Before the official announcement of the plan, every family member who registered for cash subsidies received a sum of 810,000 rials ($78.18) over the course of two months.
The president stated that the government would tackle economic problems, such as housing, unemployment, and banking system problems, through the implementation of the plan.
According to the president, the plan will lead to better distribution of wealth in the country.
Officials say subsidies have been costing the Iranian government about 100 billion dollars a year.
Supporters of the plan say it is in line with global financial organizations' recommendations that Iran must eliminate subsidies if it wants to solve its economic problems. But some analysts have criticized the plan, saying it could trigger a hike in prices and stoke up inflation in the country.