Government Proposal to Parliament for a 10% Increase in Water and Electricity Prices

Hamid Chitchian, the Minister of Energy, announced the ministry's proposal to increase water and electricity prices by 10% to the government, parliament, and the Economic Council. According to Iranian news agencies, Chitchian stated on Wednesday evening (July 25) during a television program that this proposal will be submitted to the responsible organizations in accordance with the Sixth Development Plan, adding that by the end of this plan, the prices of water and electricity must be 'realized,' while 'the budget law has predicted that we should not have price increases.' According to the Minister of Energy, 2016 was 'the last time' that water and electricity prices were increased by 10%, and since then, there has been no price increase for these utilities. Chitchian further mentioned that currently, the cost of producing each kilowatt-hour of electricity is 120 tomans for the Ministry of Energy, while it is sold at 66 tomans, resulting in a loss of 54 tomans for the ministry. He also reported that the Ministry of Energy is owed 30 trillion tomans by the government for the difference between the single price and the actual price, which 'has not yet been collected.' Regarding Iran's water situation, Chitchian stated that 'the total losses in the country's water network are about 24%,' with '13% of this amount related to losses and the rest due to the old age of the meters.' He noted that 'to reduce each 1% of the losses in the water networks, about 1200 billion tomans are needed, and given the very low prices of water tariffs, it is not possible to reconstruct the networks in a very short time.' The Minister of Energy also announced that 'before this government took office, 570 cities in the country were experiencing water stress, but now this number has decreased to 307 cities.' Chitchian had also mentioned last year that the price of electricity in the country is very low, which is one of the main reasons for its high consumption. He added that there is a belief in the country that increasing electricity prices might harm some citizens, 'while the price of electricity is not supposed to increase uniformly... definitely, people will not suffer losses.' The household electricity tariff in Iran increased by 10% in March 2016 for each consumption tier, and in March 2015, the price of this energy increased by 24%. Each tier depends on the kilowatts and the amount of electricity consumed in each household. The price of electricity consumption in Iran also depends on the time of use. The increase in electricity prices in Iran has its critics, especially in areas where electricity bills are very high due to the lack of gas. Chitchian had also stated in March 2014 that the price of electricity had increased by 25%, and this increase was implemented from that March. Based on the budget law of 2014, which was approved by parliament, the government was allowed to increase energy carrier prices. Meanwhile, government officials had stated that the increase in energy carrier prices would be 'gradual.' Various government officials, including Hassan Rouhani, the President of Iran, have repeatedly said that they face revenue problems in providing cash subsidies and other projects.