This announcement is the latest in a series of developments over the last 20 years where the Iranian government has sought to modernise the country's power sector. In this update, we look at the historical background to Iran's power industry and analyse how the latest developments will be transforming the way Iran manages this significant sector of its economy.

Historical background

Iran embarked on an ambitious power market reform and privatisation in the early 1990s to meet rapidly rising electricity demand and increase its generation capacity.

However, the first attempt to privatise the power sector failed to deliver any meaningful results mainly because the power plants were not run as companies. Rather, they were treated as part of the assets held by the relevant state-owned provincial power companies. In addition, there was no clear regulation on how to value the assets (including the power plants) and equipment held by the provincial power companies.