Iran hikes natural gas tariffs, resumes use of dirty fuels

The Iranian government has mandated increases in household gas tariffs while authorizing controversial measures to use mazut in power plants to offset the country's energy crisis.

A resolution by the Economic Council, published Sunday, instructed the Ministry of Oil to create household gas tariffs designed to discourage overconsumption. The move includes categorizing more households as high-consumption users.

“The Ministry of Oil must ensure these tariffs have evident deterrent effects for excessive and unnecessary consumption,” the resolution read.

The tariff changes come alongside scheduled power outages initiated on November 10 due to insufficient fuel reserves. The government had halted mazut burning at select power plants but now plans to restart its use across industries and provincial power stations, sparking public health and environmental concerns.

Citizens, who already contend with heavily subsidized but rising energy costs, now face worsening air quality as mazut—a fuel laden with sulfur and toxins—fills the gap left by dwindling natural gas supplies.

Iran’s decision to calculate residential gas tariffs comes as part of broader fiscal policies to generate additional revenue. Under the new structure, commercial tariffs will also rise, with calculations based on recent peak rates.

Abbas Kazemi, former CEO of the National Iranian Oil Refining and Distribution Company, blamed mismanagement for the fuel shortages. Speaking to ILNA news agency, Kazemi said that critical diesel reserves were depleted after being sold on the stock market.

“Instead of stockpiling diesel for winter, the Abadan Refinery sold 400 to 500 million liters meant for power plants,” Kazemi said.

This mismanagement, coupled with a 36% decline in mazut and diesel reserves compared to last year, has pushed Iran’s electricity grid to a critical juncture. Reports indicate that natural gas supplies to power plants in November have plummeted by 30% year-on-year, leaving thermal power stations—responsible for 80% of Iran’s electricity generation—dependent on low quality mazut.

Speaking to Khabar Online on Sunday, Hadi Haghshenas, an economic expert and the governor of Gilan Province, said: "The lack of electricity primarily stems from insufficient gas supplies. The shortage of gas, in turn, is a result of inadequate investment in the country. The imbalances in the nation are turning into a tangled web, growing increasingly complex."

The use of mazut exacerbates air pollution. High levels of particulate matter from mazut burning increase the prevalence of respiratory and cardiovascular diseases.

“The government’s reliance on mazut is forcing citizens to endure air pollution on top of power outages,” said Mohammad Jafar Ghaempanah, a senior government official, who also suggested reducing household energy consumption as a solution to outages.

As winter approaches, Iranians face an unprecedented convergence of crises with spiraling utility costs, power shortages, and public health risks in spite of being a nation endowed with vast natural gas reserves.