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The effect of targeted subsidies on energy-intensive industries
Majlis Research Center studied the effect of targeted subsidies on energy-intensive industries.
According to the Public Relations Office, active mineral industries, according to its share in the consumption of types of energy carriers, is one of the important sectors affecting energy demand and consumption, the Office of Energy, Industry, and Mining said. Consequently this issue and the adoption and enforcement of targeted subsidies and liberalization of energy prices in the country, active mineral industries are including sectors that are affected by this, the office added.
According to the report, rising prices of types of energy carriers has led to rising cost price of mineral industries products, especially steel products, zinc, aluminum, and cement than before targeted subsidies and liberalization of prices and also reduced or eliminated the profit margin. On the other hand, liberalization of energy prices has affected on other factors of production and raw material prices and wages has been also increased.
All of these issues with the government banning the price rising of types of mineral industries products caused that factories are faced with serious crisis that in some cases, has led to the closure of some factories of the private sector.
In the steel industries, public sector companies which have more than 70 percent of the production of the country are faced with little difficulty but private sector companies are faced with severe structural problems that after the implementation of targeted subsidies, the number of problems have been added.
The results of studies show that private companies operate with less than 50 percent of installed capacity now. Also, the copper industry due to high global prices and large mines rent, profit margins are still high and rising prices of energy carriers has so little effect on these industries. (The text of this report is attached.)