Gas Shortages Halt Cement Production
Iran’s cement industry is reeling under the impact of a severe energy crisis, with the Secretary of the Cement Industry Employers Union announcing the suspension of production in 22 factories due to gas shortages. According to Ali Akbar Alwandian, factories that remain operational are also grappling with power outages lasting several hours, forcing them to operate below capacity.
Speaking on December 25, Alwandian stated that gas supply restrictions to cement factories began on October 6 and have progressively worsened since then. He highlighted the situation in Tehran and Khorasan, where cement factories have ceased operations entirely. “Last winter, the industry faced an energy crisis, but this year, the severity has increased, and it started earlier. In 2022, gas restrictions began on November 6, whereas this year, they started a month earlier, on October 7, causing more significant damage to the industry,” Alwandian said.
Wider Impacts on Construction and Steel Industries
The challenges facing the cement industry are mirrored across other sectors. Last summer, severe electricity shortages forced the suspension of operations in many cement factories, leading to a 90% increase in cement prices by August. The crisis also disrupted construction projects nationwide. Similarly, Iran’s crude steel production plummeted by 46% during the summer due to power outages, according to World Steel Forum statistics.
Escalating Energy Deficits
This winter, Iran is experiencing unprecedented electricity and gas shortages. The regime’s inability to supply sufficient gas and liquid fuels to power plants has compounded the crisis. In response to reports about the shutdown of the Rey power plant due to fuel shortages, the National Iranian Oil Products Distribution Company urged the media to refrain from publishing information that might “disturb public peace.”
While confirming the Rey power plant’s shutdown, the Oil Ministry attributed it to the facility’s “low efficiency.” Instead, fuel supplies were redirected to more efficient power plants in Damavand and Parand, both in Tehran Province. Efforts to enhance the Rey power plant’s efficiency—from 23% to 55% since 2021—have yet to yield results.
Despite claims of increased diesel and fuel oil delivery to power plants—a 50% rise in the last four months compared to the previous year—Iran has only achieved half of its electricity production growth targets over the past decade. This shortfall contributed to a 25% electricity deficit during peak summer consumption.
Chronic Gas Shortages and Rising Costs
Contrary to official claims of rising gas production, growth in this sector has stalled since 2022. As a result, Iran now faces a 30% gas deficit during peak winter consumption. Once characterized by seasonal shortages—electricity in summer and gas in winter—Iran is now grappling with year-round energy deficits.
The energy crisis has inflicted heavy losses on Iran’s industrial sector. According to the Industry Commission of the Chamber of Commerce, factories incur daily losses of 8 trillion tomans due to power outages. Alireza Kolahi Samadi, head of the commission, estimates that the industrial sector’s total losses from power outages amount to 250 trillion tomans, equivalent to a $3 billion decline in a short period.
Economic Fallout
Metal industries have reduced exports by approximately $8 billion in the past year, while the mining sector faces daily losses of 4 trillion tomans. Research by the Chamber of Commerce shows that power outages in the industrial sector have impacted the economy 23 times more severely than in wholesale and retail sectors.
Experts warn that if this trend continues, it will trigger widespread closures of production units and a surge in unemployment. A report from the Industry Commission reveals that daily losses from power outages increased from 5.843 trillion tomans in 2022 to 8 trillion tomans in 2023. Addressing the energy crisis will require $10 billion to compensate for a 20,000-megawatt electricity shortfall and an additional $25 billion to upgrade the country’s transmission network.
A Looming Crisis
Iran’s energy sector woes underline the broader economic challenges facing the country. Without urgent investment and policy changes, the energy crisis threatens to exacerbate industrial decline, hinder economic growth, and deepen societal discontent.
Source » irannewsupdate