Energy supply disruptions are forcing Iranian industries to operate at half capacity, threatening thousands of jobs as the Persian New Year contract renewal period approaches.
Workers in the oil, gas, and automotive sectors report employer warnings about potential job cuts due to reduced production capacity.
The situation came to light through worker protests at the Iran Wood and Paper Industries factory, as seen in recently released video footage.
One protester explained that the northern Talesh-based facility, which employs 700 workers in paper production, faces a combination of financial, management, and now energy-related challenges that have severely hindered operations.
“The Iran Wood and Paper Industries factory has long struggled with financial and management problems,” said a worker during the protest. “Workers are dissatisfied with the current situation.”
The factory’s operations have slowed significantly, with energy supply issues exacerbating already existing financial and managerial difficulties.
Similar reports are emerging from other industrial centers across the country, suggesting a widespread crisis affecting both small and large manufacturing operations.
The timing is especially critical as it coincides with the end of the Persian calendar year when many employment contracts are up for renewal.
A manager of a small private industrial company in central Arak, which manufactures car parts, spoke to IranWire about the challenges his company and its workers face due to energy shortages.
“I am worried not only about myself but also about the employees who work with me. At my company, we experience power outages once a week,” said the manager.
The manager added, “This has resulted in two private lawsuits filed against me by larger companies we have contracts with, as I couldn’t deliver parts on time due to energy shortages and blackouts.”
According to the manager, producing a single part requires collaboration across multiple industries.
“Manufacturing a part is a collective effort. For example, our company handles one part of the process, while another producer works on a different aspect until the product is complete,” he said.
“If my company shuts down one day and another company shuts down the next, these interruptions delay the final product.”
“The reality is that the dire state of domestic industries and production in Iran is the result of over 40 years of incompetence and inefficiency.
“The government tries to blame the situation on citizens’ improper energy consumption, but in reality, this accounts for only 10 percent of the issue. The remaining 90 percent is due to corruption and the failure of top officials who have never been competent or genuinely concerned,” he said.
Wage demands by industrial workers have become a major economic crisis for successive governments in the Islamic Republic. However, the crisis is rarely acknowledged by officials.
Many industrial workers believe that reduced production and the shutdown of industries create a double-edged sword that harms both workers and producers.
The private-sector employer interviewed by IranWire said, “As an employer, I’m forced to adapt to the current conditions, where the factory is shut down during the day.”
“For example, if there’s no power on Tuesday, I have to ask workers to come in on Friday or increase night shifts because daytime operations are impossible.”
“It’s inhumane, but there’s no alternative. If a worker accepts, their life becomes chaotic. If they refuse, they lose their job,” he added.
Rahmatollah Norouzi, Deputy Chair of the Parliament’s Economic Commission, highlighted the simultaneous crises of widespread power outages in industries and the devaluation of the national currency.
“Employers have to pay taxes and import raw materials, but with these [currency] exchange rate fluctuations, production costs are skyrocketing, leading to massive losses,” he said.
He continued, “When an employer finds that electricity is unreliable, they lay off workers or cut overtime, which harms the workers.”
“Today, with inflation over 40 percent, workers cannot survive on their wages. Rent, living expenses, and school fees for their children are rising, and their tables grow smaller every day.”
Petrochemical, oil, and gas plants are also struggling.
A worker at the Bandar Imam Petrochemical Complex in southern Mahshahr told IranWire, “Since the beginning of autumn, due to frequent gas and occasional electricity outages, our facility has been operating with only half of its workforce, leading to a 40 percent drop in production.”
On January 6, the Iranian Chamber of Commerce’s research center reported that daily disruptions in electricity production, transmission, and distribution cause losses of 17.97 trillion tomans ($223 million) to the economy, with 9.21 trillion tomans ($114 million) directly impacting the industrial sector.
According to the chamber’s experts, the estimated daily losses to the industrial sector are based on Iran’s 2023 national accounts, adjusted for a 35 percent year-on-year inflation rate as of September 2024.
A professional in Iran’s oil and petrochemical industry told local media that industries sustained losses of at least 180 trillion tomans ($2.2 billion) in 2024 due to persistent power and gas outages.
An employee at the Bandar Imam petrochemical complex described the official damage estimates as understated.
“Right now, many of our subsidiary companies are in dire situations. Contract renewals for workers are uncertain, and many are convinced their contracts won’t be extended next year,” the worker said.
“Haven’t you heard officials at the Ministry of Industry, Mines, and Trade warning about a harsh summer? They’re already preparing us for increased power cuts. If industries lose electricity for one or two days a week in winter, it will surely be worse in summer,” he added.
A worker at the Khuzestan Steel Company confirmed the near-closure of his factory, saying, “I can confidently say our facility has only operated for about four months out of the ten months of this year. Officials are in denial, but Iran’s steel industry is almost bankrupt.”
“Now the Ministry of Industry is discussing the possibility of completely cutting electricity to industries during the summer,” he added.
Reports from Iranian media indicate that 36 percent of the country’s electricity is consumed by the industrial sector, followed by 31 percent for residential use, 14 percent for agriculture, and 9 percent for public institutions. Additionally, 8 percent is categorized under miscellaneous uses, while 1 percent is allocated for exports and another 1 percent for street lighting.
On January 11, Erfan Afazeli, Secretary General of the Iranian Oil Industry Confederation, acknowledged in an interview with ILNA, “In recent years, there has been no significant investment in electricity and gas production.”
He added, “Due to the lack of investment in gas fields to maintain production levels and prevent pressure drops, we are projected to lose the equivalent output of one phase of South Pars in the next two years.”
“Currently, most natural gas is used for heating homes and businesses during winter, leaving industries struggling with gas and electricity shortages. This winter, we face not only gas shortages but also electricity deficits,” he said.
Afazeli warned that unless the government addresses the imbalance in electricity and gas supply, the year-on-year growth in consumption could lead to a medium- and long-term geopolitical crisis.
Source » iranwire