Iran’s Industrial Sector Gutted by Regime’s Crippling Energy Crisis

Staff WriterMay 22, 2025
Iran’s Industrial Sector Gutted by Regime’s Crippling Energy Crisis
Massive electricity outages are taking their toll on Iran’s industrial sector

Massive electricity outages are taking their toll on Iran’s industrial sector
Written by
Amir Taghati

Recent reports and admissions from within Iran’s regime paint a grim picture of the nation’s industrial sector, teetering under the dual pressures of a severe energy crisis and the disastrous consequences of a mismanaged privatization drive.

These intertwined challenges are leading to factory shutdowns, significant job losses, and a broader economic decline, with even regime officials acknowledging the systemic nature of the problems.

The most immediate and tangible crisis facing Iranian industry is the chronic shortage of electricity and gas. In a stark illustration, the Aria Steel Factory in Ardestan recently laid off 40 workers due to what it termed an “imbalance of electricity and reduction in factory operating hours,” as reported by the state-run ISNA news agency. The factory’s manager elaborated that energy limitations over six months had slashed production to a mere one-fifth of its capacity.

With 170 workers still employed, the manager warned of further layoffs if the factory cannot meet its payroll obligations. Compounding the factory’s woes, the Ardestan governor revealed that Aria Steel owes approximately 250 billion tomans to the electricity department, half of which is due to fines, highlighting how energy instability directly impacts operational viability.

This situation is not isolated. Ehsan Qazizadeh Hashemi, a member of the parliament’s Industries and Mines Commission, has cautioned that “if power outages are long-term, it will definitely be detrimental to production, and the finished cost of goods will become more expensive.” He further stressed the need for advance warnings of power cuts and equitable distribution among various sectors, an implicit acknowledgment of current failings in energy management.

The energy deficit impacts not only large industrial complexes but also threatens the daily operations of essential services. Bakeries, for instance, providers of a staple food, already grappling with a multitude of regime-induced challenges, face further operational hurdles and increased costs due to unreliable energy supplies.

Member of Parliament Mohsen Zanganeh acknowledged in a parliamentary session on May 18, 2025, the “repeated protests by bakers,” attributing their “difficult conditions” to government indecision on flour and wheat prices, cuts to subsidies by banks, a 20% increase in labor costs and social security contributions for employers, and reduced flour quotas. While Zanganeh did not specifically cite power outages in his list of bakers’ grievances, any interruption to energy supply – crucial for ovens and other bakery equipment – would inevitably compound these existing burdens. Such disruptions would further drive up their production costs, as broadly warned by MP Qazizadeh Hashemi, squeezing these essential businesses even further.

The roots of this energy crisis, according to some within the establishment, lie in systemic mismanagement. Zabiullah Khodaeian, the Head of the General Inspection Organization, identified the “energy imbalance” as one of the serious economic crises, attributing it to “mismanagement” alongside sanctions. He specifically pointed to the poor past performance of the Ministry of Power, whose incorrect policies, he stated, prevented

Beyond the immediate energy woes, the long-term health of Iranian industry is further undermined by a deeply flawed privatization process. Despite Article 44 of the constitution aiming to transfer state-owned enterprises to the private sector, the reality has been far from the intended economic revitalization. The Vatan-e Emrooz newspaper, on May 12, 2025, highlighted that many privatized enterprises have simply gone bankrupt.

This assessment was starkly corroborated by Khodaeian, the Head of the General Inspection Organization. During a meeting with the Chamber of Commerce, he revealed that “over 70 percent of the transferred enterprises have faced bankruptcy.”

Critically, he noted that these entities “were mainly transferred to non-governmental public institutions,” a term often used to describe organizations with close ties to the regime, suggesting that the privatization process has often served to consolidate economic control within favored circles rather than foster genuine private enterprise. This, he argued, has “exacerbated the economic crisis.”

The evidence, drawn from Iranian state media and official statements, strongly indicates that the regime’s profound mismanagement of the energy sector and its corrupt handling of privatization are systematically dismantling Iran’s industrial capacity.

This is not merely an abstract economic issue but one with severe consequences for the livelihoods of ordinary Iranians, from factory workers to the bakers providing daily bread, fueling unemployment and widespread economic hardship. The admissions from within the regime itself underscore a deep-seated crisis that superficial measures cannot resolve, pointing to fundamental flaws in governance and economic stewardship that continue to cripple the nation’s potential.

Staff WriterMay 22, 2025
Arab-Islamic Committee in Defence of Ashraf
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