Islamic Republic of Iran : Power Sector Note
Over the past decade, the Iranian electricity sector's ability to supply reliable service has come under increasing pressure. This is evidenced by more frequent gas supply constraints to generation plants, high levels of debt and increasing lo...
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| Format: | Policy Note |
| Language: | English en_US |
| Published: |
Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2007/01/7379575/iran-power-sector-note http://hdl.handle.net/10986/19639 |
| Summary: | Over the past decade, the Iranian
electricity sector's ability to supply reliable service
has come under increasing pressure. This is evidenced by
more frequent gas supply constraints to generation plants,
high levels of debt and increasing losses in the network.
The key roots of the problems in the sector are the
under-pricing of natural gas which fuels the majority of the
power generation, and the low retail electricity tariffs
which lead to high per capita consumption of electricity and
thus large investment requirements in new generation
capacity to keep up with the demand. The Government of Iran
is aware of the challenges and is pursuing a number of
reforms to improve the performance of the sector, including
private sector participation in the generation of
electricity and implementation of a power pool with a view
of developing a competitive market. While these reforms will
eventually contribute towards a more sustainable sector,
their implementation and success will require tackling the
under-pricing of natural gas and electricity. Without
tackling these issues, the impact of reform efforts will
remain limited and to some extent academic, and run the risk
of increasing the Government's fiscal exposure as
under-writer of the policies and transactions in the sector.
This Note reviews some key challenges in the sector and
highlights their strategic implications. The Note also
provides some suggested next steps in the form of a
"road-map" to address these issues. |
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