Power Cuts Exacerbate Manufacturing Woes Amid Iran's Electricity Crisis

Monday, 03/11/2024

Power cuts in industrial units in Iran have sparked concerns among manufacturers, leading to a downturn in production and a surge in overall costs.

According to a report by the Iranian Labour News Agency (ILNA), the electricity production capacity in the northern province of Golestan stands at 1500 megawatts. However, more than 600 megawatts of electricity needed by Golestan are sourced from other provinces due to shortages.

Voltage fluctuations and power outages have become recurring issues for both citizens and manufacturers, compounding the challenges faced by businesses.

Earlier statements from Iranian officials have highlighted the country's dwindling net electricity exports, which have now reached zero due to internal deficits. Official data indicates a gradual decline in electricity exports over the past three years, coupled with an increase in imports.

A decade ago, Iran boasted net electricity exports of 8 terawatt-hours (TWh). However, the figure plummeted to just over 1 TWh last year and has now hit rock bottom.

Several factors contribute to the decline in electricity exports. High domestic consumption persists as the government maintains low electricity prices through a long-standing subsidy program, fearing public backlash if prices were adjusted.

Additionally, inefficiencies within the government-controlled economy exacerbate mismanagement and hinder sectoral growth. Years of foreign sanctions have also taken their toll on Iran's energy infrastructure.

Iran has struggled to meet its electricity generation growth targets in recent years, facing a shortfall of 14 megawatts (MW) during peak summer demand.

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