Electricity 'Dumping'? Dispute Between the Ministries of Energy and Oil

The Iranian Oil Minister has requested the Ministry of Energy to stop the export of cheap electricity. According to a report published by Mehr News Agency on Wednesday, September 4, the dispute between the Oil and Energy Ministers regarding electricity exports has entered a new phase. While Bijan Namdar Zangeneh accuses the Energy Ministry of electricity dumping, Hamid Chitchian considers electricity exports to be economically viable. In separate press conferences, the two ministers expressed completely different reactions regarding electricity exports. According to the official report from the Ministry of Energy, Iran has exported about 12 billion kilowatt-hours of electricity and imported nearly 4 billion kilowatt-hours of electrical energy in recent years. According to Energy Ministry officials, the volume of Iran's electricity exports reaches 800 million dollars annually. However, electricity exports have been criticized from several perspectives by Oil Ministry officials and some members of parliament. A key issue in this area is the 37% efficiency of Iran's power plants and the wastage of 14% of electricity during the transmission process, which leads some in Iran to label the conversion of gas to electricity and its export as uneconomical. According to the official report from the Ministry of Energy, Iran's thermal power plants produce less than 3.5 kilowatt-hours of electricity from each cubic meter of gas, which is a very low figure. For example, power plants with 55% efficiency in Turkey, which is a customer of Iranian gas and electricity, convert each cubic meter of gas into 5.2 to 5.5 kilowatt-hours of electricity. On the other hand, Iran provides gas to domestic power plants at a price much lower than the export price. Considering the annual consumption of nearly 50 billion cubic meters of gas and 20 billion liters of diesel and fuel oil in the power sector, some Iranian officials believe that selling raw gas is better than exporting electricity. According to Mehr News Agency, Bijan Namdar Zangeneh, the Iranian Oil Minister, states that 'assuming we export each cubic meter of gas to Turkey at a rate of 40 cents, they convert most of the gas they buy from us into electricity, actually producing five kilowatt-hours of electricity from each cubic meter of gas they receive. Considering that each kilowatt-hour of electricity costs them 10.5 cents, if we export electricity to them at a price of seven cents, will Turkey continue to buy gas from us?' Turkey buys nearly 10 billion cubic meters of gas from Iran annually, most of which is delivered to its power plants for electricity generation. Turkey has complained about the price of gas from Iran, paying about 490 dollars for every thousand cubic meters in recent years. Turkey also purchases over 20% of Iran's total electricity exports, amounting to approximately 2.5 billion kilowatt-hours annually. Nevertheless, Mehr News Agency reports that Hamid Chitchian stated in a press conference this week that if Iran, the largest holder of gas reserves in the world, cannot produce and export electricity, then where in the world is electricity export economically viable? He added that if the Oil Ministry allocated the same price for gas sales to petrochemical companies to power plants, gas exports would be completely economically viable. However, the Oil Minister argues that gas and electricity should never compete with each other. 'If there is competition between the two sectors, the national interest will be harmed.' Zangeneh reminded that 'the petrochemical issue is different because a petrochemical company that receives gas from us mainly converts it into products, so if we provide gas to petrochemicals at any price, it will be beneficial for them, as this company will eventually sell its product at international prices in foreign markets.' The Oil Minister emphasized that if the gas supplied to power plants is to compete with export gas, it is not a correct approach, adding, 'providing gas to domestic power plants at a low price so they can export electricity at a low price is actually detrimental to the country's interests.'