T he nominal capacity of electricity generation of the country's power plants was 23,257 megawatts by the end of last Iranian calendar year (ending March 20, 1998), while the actual capacity reached minimum 20,650 and maximum 22,141 megawatts. The country's electricity output increased by 800 megawatts last year to meet the 7.5 percent local growth in power consumption. Only in the Government Week, August 24-30, the power generation capacity of the country increased considerably: the second phase of the Qom Combined Cycle Power Plant with 200 megawatts power generating capacity joined the national grid last Thursday. Earlier, the first phase of Khoy Combined Cycle Power Plant with a capacity of 250 megawatts was put into operation.

Now Iran is exporting 40 megawatts of electricity to Turkey, 60 megawatts to the Autonomous Republic of Nakhichevan and 50 megawatts to the Republic of Armenia annually, fetching some $20 million. Except some cases of power shutdown in the past few weeks in a few cities, the general status of power generation and distribution has proved to be satisfactory this year.

However, the technical points as mentioned by the local officials concerning the recent power cuts in some parts of the country could have been stopped, should there had been timely remedies. The country's electricity consumption growth rate which is nearly 7.5 percent on the one hand and decline in the investment in electricity sector on the other, the future does not seem to be as rosy as it is today.

Investment in electricity sector proves to be highly costly, being it hydroelectric power generation, combined cycle power generation, gas or thermal power generation. For instance the first phase of Qom Combined Cycle Power Plant with a generation capacity of 514 megawatts of energy cost more then Rls.22 billion plus 23 billion yens in 1993 while the second phase of the power plant took some $145 million plus Rls.80 billion.

The first phase of the Khoy Combined Cycle Power Plant which also became operational last week cost some Rls. 30 billion plus $65 million. Operations are underway now in the country to set up a 5,200-megawatt thermal power plant and an 8,000-megawatt hydroelectric power plant. The statistics shows that in spite of proper planning for power generation, there will be shortcomings in electricity supplies in the country in coming decades, mostly due to growth in electricity consumption.

Meanwhile, due to the recent drastic drop in oil prices in the world market the country's revenues have decreased significantly resulting in erasing some development projects, especially in electricity and water sectors. It seems that eventually the government would not be able to meet the demands as electricity consumption grows larger and larger. Grounds should be prepared for the participation of private sector in investment of electricity industry.

However, the role of private sector in power generation, transmission and distribution should be based on a dynamic plan encouraging the private sector to invest in this sector.