TEHRAN - Iran's Cabinet has approved a support package to mitigate the impact of electricity and gas cuts on both publicly traded and private companies, Tasnim News Agency reported.

The government approved the measure on February 27, following a proposal by the Minister of Industry and in coordination with the Ministry of Labor, the Planning and Budget Organization (PBO), and the Central Bank of Iran (CBI). The initiative aims to alleviate some of the economic burdens caused by energy shortages.

Under the plan, with the approval of the CBI and the Industry Ministry, a portion of bank loans and tax payments for affected production units will be deferred for six months and three months, respectively. Additionally, production units that owe payments to the Social Security Organization due to power and gas shortages can access special deposit bonds through Bank Refah to cover their dues.

Another provision in the decree allows for a three-month tax deferral for affected production units, subject to approval by the Ministry of Industry, Mining, and Trade.

The resolution also mandates a task force comprising the Ministries of Industry, Oil, and Energy, along with the PBO, to develop strategies for ensuring power and gas supply to major industries in the coming year.

The recent energy imbalances and frequent power outages have had a significant impact on Iran’s industrial sector, disrupting production lines and increasing operational costs for manufacturers. Many industries, particularly energy-intensive sectors such as steel, cement, petrochemicals, and aluminum, have faced periodic shutdowns due to gas supply restrictions in winter and electricity shortages in summer. These disruptions have not only led to financial losses for companies but have also slowed down project developments and reduced output, affecting both domestic supply and exports.

Small and medium-sized enterprises (SMEs) have been particularly vulnerable to these disruptions, as they often lack backup energy solutions and face greater difficulty in absorbing financial shocks. Many businesses have reported delays in fulfilling contracts and increased maintenance costs due to the strain on machinery caused by inconsistent power supplies. The ripple effects of these challenges have also been felt in employment levels, with some factories forced to reduce working hours or temporarily lay off workers.

The government’s support package comes in response to mounting concerns from industry leaders, who have repeatedly warned about the long-term consequences of energy shortages on Iran’s manufacturing sector. While the short-term relief measures provide temporary financial ease, industrial stakeholders stress the need for long-term solutions, including investment in energy infrastructure, diversification of power generation sources, and improved efficiency in energy consumption.

EF/