Iranian power plants will commence rolling blackouts unless they receive $6 billion in missed payments.
Utilities aren’t flexing their muscle like in LA — they’re just running out of money.
“We are not threatening the government with blackouts. If we are not going to be paid we will simply be unable to meet demand. Many electricity companies are already on the verge of collapse,” a syndicate board member said.
The bigger issue is that Iran doesn’t have enough power plants to meet growing consumer demand. And power plants require FDI:
Building new power plants, renovating existing ones and developing the distribution network all require funding and economic sanctions mean there is no foreign investment in the sector. The key issue is the low prices of electricity fixed by the government and the subsidies paid to consumers, which have reduced investor interest in the sector.
Given time, Ahmadinejad will build the right infrastructure and reap the resource windfall. That’s why international sanctions will grow teeth this summer (see Iran’s export problem) or never.
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