Privatization of electricity distribution sector in Iran

Abstract

The privatization of electric power distribution sector is the new challenge in recent decade. The privatization of electricity industry originates with purpose of improving the quality of supply, reducing the electricity price (especially in developed countries), decreasing the participation of government in this industry (especially in developing countries), and etc. According to the Principle 44 of Iranian Constitution, at least, 80% of electricity distribution companies must be privatized. Although some shares of distribution companies have been transferred from government to public bodies recently, but elimination of monopoly and introduction of competition are new goals for privatization. In this paper, the reasons of successes and failures of past experiences in privatization in Iran are identified and based on this knowledge and benchmarking with some foreign countries experiences, the structure of distribution sector of Iran in according to facilitating private participation are proposed. The new entities, their functions and interrelations are determined in the model. In addition, the required executive action plan for achieving the proposed model is presented.