On November 17, Abbas Kazemi, the former CEO of Iran Oil Products Refining and Distribution Company, disclosed a troubling case of mismanagement that is exacerbating Iran’s energy crisis. According to Kazemi, the Abadan Refinery, instead of allocating 450 million liters of diesel for winter reserves to power plants, sold it on the stock market at free-market prices. This decision, while not illegal, has had far-reaching implications for the country’s power generation capacity and energy security.
Liquid Fuel Reserves Plunge Amid Energy Crisis
Data from Iran’s Ministry of Energy reveals a stark trend: since September 2024, the process of filling liquid fuel reserves for power plants has stalled. These reserves have dwindled to just one-third of their normal levels, exposing the government’s claim of reducing mazut (a heavy fuel oil) usage for environmental reasons as a façade. The decline in reserves, coupled with a 30% reduction in gas supply to power plants compared to 2023, has pushed Iran into a precarious energy situation.
Electricity production, a critical component for infrastructure, businesses, and households, is now under threat. In response, the government has begun implementing periodic power outages to conserve energy and prevent the complete shutdown of certain power plants during the winter months.
Mismanagement of Diesel Reserves
Kazemi’s revelations shed light on the underlying causes of the energy crisis. Speaking to ILNA News Agency, he explained that in previous years, diesel was stockpiled between May and September to compensate for seasonal gas shortages. However, this year, the Abadan Refinery sold approximately 1.3 billion liters of diesel in just four to five months, including 450 million liters earmarked for winter reserves. While legal, Kazemi criticized the move as “neither prudent nor far-sighted.”
This lack of foresight has left Iran’s power plants facing a 60% shortage of liquid fuel capacity. With gas supplies also constrained due to sanctions and outdated extraction technology, power plants have increasingly turned to burning mazut and diesel, which contain high levels of sulfur and other toxic compounds, worsening air pollution and public health risks.
Broader Policy Failures
Kazemi also criticized several major electricity-consuming ministries—including Industry, Roads and Urban Development, Agriculture Jihad, and Interior—for failing to adhere to energy-saving regulations. He stated that over the past two decades, these ministries have neglected their legal responsibilities, leading to excessive fuel consumption and contributing to national economic instability.
“In the last 20 years, we’ve turned our national capital into fuel for consumption,” Kazemi lamented. “This has resulted in increased disequilibrium, higher inflation, and reduced national income.”
Iran on the Brink of Diesel Import Dependency
Kazemi warned that if current consumption patterns continue, Iran risks becoming a diesel importer. The equilibrium between diesel production and consumption is now razor-thin, and any further mismanagement could push the country into dependency on external fuel sources.
Structural Challenges in Iran’s Energy Sector
Iran’s energy challenges are compounded by systemic issues. The country relies on gas for 80% of its electricity production, but sanctions and outdated infrastructure have hindered gas extraction. As a result, power plants are forced to rely on mazut and diesel, despite the severe environmental and health consequences.
The use of these fuels has led to the release of particulates and toxic gases, worsening air quality across the country. This is particularly alarming as Iran faces mounting international pressure over its environmental policies and public health outcomes.
Conclusion
Kazemi’s revelations highlight a critical intersection of mismanagement, structural inefficiencies, and geopolitical constraints in Iran’s energy sector. The government’s failure to maintain adequate fuel reserves, coupled with its reliance on outdated and environmentally damaging fuels, is jeopardizing the country’s energy security and economic stability. Without significant policy changes and investment in modern energy infrastructure, Iran risks plunging deeper into an energy and environmental crisis.
