Iran’s deepening energy imbalance is squeezing industrial activity to the point that many producers now describe the situation as a “silent death” of industry, according to business representatives. Power and gas shortages have forced factories to operate at roughly half of their nominal capacity, sharply eroding profitability and accelerating workforce downsizing.
As energy shortages intensify each year, industry has increasingly become the government’s first target for supply restrictions. At the same time, discussions are underway over possible price hikes for gas, electricity and diesel fuel supplied to industrial users—a prospect that has alarmed manufacturers already under pressure.
In an interview with Donya-e-Eqtesad, Saeed Shojaei, deputy minister of industry, mine and trade for planning and business environment development, said multiple energy reform initiatives are being pursued simultaneously by different institutions, warning that fragmented policymaking is amplifying risks for industry.
He pointed to parallel plans under the Seventh Development Plan, new efficiency programs and separate gas distribution policies led by the Oil Ministry, arguing that “island-style decision-making” has left industry exposed to overlapping shocks.
According to Shojaei, industrial electricity prices have risen by about 320% and gas prices by 263% over the past four years, while additional charges have effectively tripled bills beyond official tariffs. He stressed that Iranian industry no longer benefits from cheap energy once sanctions-related costs, logistics and input inflation are factored in.
Beyond energy, pressures have compounded. Industrial wages have doubled in the past three years, while producer inflation has surged 170%, sharply reducing firms’ resilience. Shojaei noted that more than 40% of gas supply to large industries is currently restricted, with electricity cuts also looming.
He warned that if energy reform proposals now circulating at government level are implemented without safeguards, industrial energy costs could rise by up to 300% over the next three years. Such an outcome, he said, would likely trigger widespread layoffs and plant closures, particularly among small and medium-sized enterprises, though even large energy-intensive industries would struggle to cope.
Shojaei argued that reform must be gradual and conditional. “Without prior investment in infrastructure and viable alternatives, raising prices simply pushes industry into a corner,” he said.
The priority, he added, should be stabilizing energy access, allowing firms time to adapt technologically, and only then moving ahead with price adjustments—otherwise, the end result would be accelerated deindustrialization and rising unemployment.
