Sunday, February 21, 2010

A Failure To Pay

The Iranian government may be in a lights out situation due to a failure to pay its electric bill.

A failure by the Iranian government to pay producers of electricity threatens to push the national grid into a state of failure, industry executives said.

Mohammad Parsa, the chairman of the Iranian Electricity Industry Union, told the Reformist-leaning Iranian Labor News Agency that the industry was falling behind on loan payments because of a lack of government funding.

"If this situation persists, we will not be able to honor our commitments and we will also lose our foreign market," he warned, adding shortfalls could create blackouts for Iran.

He said the government has failed to honor its payments, meaning several producers in the electrical sector are forced to operate at a minimum capacity.

He said the government owes electricity producers about $5 billion, which is roughly the same amount the sector owes the banks.

"The government buys 99 percent of our production," he told ILNA. "Ministry of Oil and Ministry of Power are our main customers. But once they buy the product and do not pay up, they disrupt our balance."
Socialism, even oil socialism, doesn't work. Supply and demand don't come into proper balance when the government sets prices.

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