Iran's key services shut down as rial plunges amid energy crisis, regional tensions | Business and Economy News

Tehran, Iran - Tens of millions of people across Iran face major disruptions as authorities shut down services in the face of a worsening energy and currency crisis amid historic regional tensions.

This week, government offices, schools, banks and businesses in major provinces and in the capital Tehran were largely closed due to increasing fuel and power shortages as temperatures dropped below freezing.

Energy Minister Abbas Aliabadi said on Wednesday that 13 power plants were out of action due to a lack of fuel.

"If the fuel is provided, there will be no problem in providing the electricity, as power plants have undergone the necessary repairs and are ready for the winter. The petroleum ministry is following up on the supply of fuel,” he told reporters after a cabinet meeting.

There were renewed power outages to homes across the country, most of which came unannounced and lasted for hours.

There were also massive industrial power outages, affecting not only large energy-intensive industries but also many small and medium-sized enterprises across the country.

It comes a month after President Masoud Pezeshkian announced a blackout - one that was shut down within days - and claimed that electricity would be cut because the government did not want to burn cheap fuel that would pollute the air.

But Tehran and major cities continue to drown in a sea of ​​smog that was visible even in satellite images, while the power outages - sometimes accompanied by communications outages such as cellphone towers and internet substations going offline - continued.

The situation is unlikely to change in the winter

The crisis is expected to deal a blow to an already heavily strained economy which rising inflation and high unemployment for years due to local mismanagement across multiple governments and severe sanctions imposed by the United States.

Despite possessing the second largest proven natural gas reserves in the world and fourth place in terms of proven crude oil reserves, Iran has been facing gas shortages in the winter for years.

The power outages were largely within summer time until now, but have recently hit the winter's first chill, with even state television experts issuing stark warnings that next year could be much worse.

Authorities have largely put the onus on the public, arguing that Iranians consume significantly higher levels of energy, especially natural gas, than people in other countries.

The gas shortage, in turn, is either putting power plants out of business or forcing them to burn cheap, dirty and low-yield fuels such as mazut, a low-quality heavy oil that has been a major driver of air pollution in Iran. recent years.

Deputy Health Minister Alireza Raisi said earlier this month that 15 percent of all deaths in Tehran are caused by air pollution, with thousands of victims each year.

Health Minister Mohammad Reza Zafarghandi said last week that Iran suffers at least $12 billion in costs and damages annually from air pollution, and some estimates put the figure closer to $20 billion.

The president apologized to the public on Monday for the fuel shortages, suggesting the situation is unlikely to change during the winter.

"God willing, we will try next year so that these things will not happen," said Pezeshkian.

Rial takes a beating

For now, his government has launched a nationwide initiative calling on people to lower the average temperature of their homes by 2 degrees Celsius (3.6 degrees Fahrenheit) to help manage the energy crisis.

Government ministers film themselves and promise to remain committed to the initiative, while lights are reportedly turned off in the courtyard of the president's office.

Lights were also turned off in major highways and expressways in Tehran and other places, plunging them into total darkness at night in a move that the police force said could cause deaths and undermine public order.

The energy crisis is hitting the country as Iran's national currency, the rial, continues to hit new all-time lows on an almost daily basis.

The battered rial broke above 770,000 per US dollar on the unofficial currency market on Wednesday, continuing a trend that has only picked up since the start of Israel's war on Gaza last year, and specifically in the wake of the fall of longtime President Bashar al-Assad in Syria last week.

Tehran lost an ally of four decades and a major playground for its "axis of resistance" with the collapse of the Al-Assad dynasty, raising concerns that the conflict could move closer to Iranian territory.

Israel, which is the first known direct airstrikes on Iranian soil since the 1980s in late October, further attacks on Iran's nuclear and energy infrastructure have threatened.

Tensions are only expected to grow with the incoming administration of US President-elect Donald Trump, who in 2018, in his first term of office, the so-called "maximum pressure" campaign against Iran after unilaterally abandoning its 2015 nuclear deal with world powers.



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *