The Price of Gas Consumed by Iranians is 12.5 Times Lower than Global Rates

The head of Iran's Energy Efficiency Organization, Hossein Sajadi, stated that the price of gas consumed in Iran is 12.5 times lower than global prices. On Saturday, June 2, he mentioned that 36% and 46% of energy in the country is consumed in the building and electricity generation sectors, respectively. According to the National Gas Company, Iran's gas consumption in the residential sector was 91 billion cubic meters last year, while the figure for the power generation sector was nearly 50 billion cubic meters. The price of gas in the residential sector in Iran varies from 44 tomans to 180 tomans per cubic meter, depending on conditions and consumption levels. Meanwhile, Iran charges 49 cents per cubic meter of gas exported to Turkey (which translates to over 1500 tomans at the free market dollar rate). Sajadi also mentioned that the price of electricity is seven times lower than global rates, which has contributed to low energy efficiency, particularly in gas and electricity sectors. According to the Ministry of Energy, Iran produced 276 billion kilowatt-hours of electricity last year, of which less than 8 billion kilowatt-hours were exported, with the rest consumed domestically. Iran also imported some electricity during this period. The price of electricity (for consumption below 100 kilowatt-hours per month) in Iran is about 40 tomans, while the export price is around 10 cents (330 tomans). The prices of gas and electricity in Iran increase in a tiered manner based on customer consumption. In the residential electricity sector, the lowest price is 40 tomans, and the highest price (for consumption above 600 kilowatt-hours in a month) is about 290 tomans. Sajadi noted that when the price of electricity is negligible for consumers, there are no incentives for efficiency in this area. Although the implementation of the targeted subsidy law somewhat reduced electricity consumption intensity, it did not increase efficiency in this sector. Energy intensity is defined as the amount of energy required to produce a certain amount of services or goods. This indicator is calculated annually by dividing the amount of energy consumed by the Gross Domestic Product (GDP). According to the latest annual report published by the Energy Efficiency Organization, which includes statistics from 2012, Iran's energy intensity in that year was one and a half times the global average. However, since then, both energy consumption and GDP have increased, with the World Bank estimating Iran's GDP dropped from over $500 billion in 2011 to below $370 billion last year. In other words, energy intensity in Iran must have significantly increased in recent years. Last December, Iran's Minister of Energy announced that energy intensity in Iran is four times the global average. Sajadi also stated that unfortunately, energy intensity in Iran has not only not decreased over the past year but has also increased, with the energy intensity in the industrial sector facing increasingly unfavorable conditions each year.