The Iranian government owes a large amount of money to contractors to complete the utilities projects but is unable to pay its debts. The government says this is due to low prices of water and electricity, Radio BBC website reported on August 14.
The Energy Ministry says the cost of electricity is 68 Tomans per Kilowatt but the government charges the customers 50 Tomans per Kilowatt. Despite eliminating the subsidies and raising the price of electricity, the government is still unable to match the costs with the revenues. According to the reports, the Ministry of Energy owes more than 20 trillion Tomans in debt to private sectors.
Following the occurrence of a severe economic downturn in the past two years, the Iranian regime has been forced to drastically reduce development budget. Moreover, international sanctions have created serious problems on transfer of oil revenues for the regime.