Iran plans to invest in its electricity sector to boost economic growth, as this sector has been suffering decreasing investments over the past five years. The Iranian power sector is facing underinvestment, a huge debt, falling oil prices reducing revenues, international sanctions due to its nuclear power programme and its hydropower generation has been hit by a drought wave. Moreover, electricity consumption is rising rapidly on average +6%/year since 2000), requiring new power capacities. The strong decrease in industrial electricity consumption over the last two years (due to international sanctions and economic stalemate) has helped avoid power outages.
Iran plans to limit waste and reduce high electricity consumption by increasing domestic and industrial tariffs. Energy subsidies were reduced in 2010 but in turn ministries had to pay back subsidies in monthly instalments, burdening the state budget and reducing financial capacities to invest in new power plants. Iran also plans to invest in renewables and to expand its electricity distribution networks. Total investments to improve the country's power sector are estimated at US$4.4bn.
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