Examining the reform of the subsidy system in the Seventh Development Plan focusing on transferring subsidies to the end of the value chain focusing on the electricity sector

Azimzadeh Arani, Mohammad; Khodadadi, , Mohammad Hasan; Miri Larimi, Seyed Majid; Mortezaee, ,Ahmad

doi:10.30507/jmsp.2026.575872.2900

Examining the reform of the subsidy system in the Seventh Development Plan focusing on transferring subsidies to the end of the value chain focusing on the electricity sector

Document Type : Research/Original/Regular Article

Authors

Mohammad Azimzadeh Arani ¹

, Mohammad Hasan Khodadadi ²

Seyed Majid Miri Larimi ³

,Ahmad Mortezaee ⁴

¹ Assistant Professor in Energy and Electricity Economics Department, Niroo Research Institute (NRI)

² Master's student in Energy Economics, Islamic Azad University, Tehran, Iran.

³ Assistant Professor at the Faculty of Electrical & Computer Engineering.Tarbiat Modares University, Tehran, Iran

⁴ PhD in Chemical Engineering, The School of Chemical Engineering, Iran University of Science and Technology Member of the Energy Policy Laboratory of the Iranian Scientific Research Center, Tehran, Iran.

10.30507/jmsp.2026.575872.2900

Abstract

Paragraph (p) of Article 33 of the Seventh Development Plan emphasizes “transferring subsidies to the end of the chain” as an approach to reforming the government’s subsidy system. This concept was previously addressed in Article 10 of the Law on Removing Obstacles to the Development of the Electricity Industry, enacted in 2022. Accordingly, examining the implementation of this mechanism can provide valuable lessons for the effective implementation of the policy envisaged in the Seventh Development Plan. This study aims to identify the challenges of implementing the transfer of energy subsidies to the end of the chain in the electricity sector and to develop relevant policy recommendations.

Relevant laws, regulations, and policy documents were systematically reviewed and analyzed within the theoretical framework of energy subsidy reform. Semi-structured interviews with energy experts were subsequently conducted to validate and complement the findings of the documentary analysis.

The findings reveal four major challenges: conflicting interests between the Ministry of Petroleum and the Ministry of Energy; weaknesses in information, measurability, and monitoring systems; the absence of a clear roadmap for energy price reform; and the risk of financial instability in the “Subsidy Settlement and Optimization Account.” Accordingly, the study recommends strengthening intersectoral governance and institutional coordination mechanisms; redesigning information and monitoring systems based on data governance; developing a transparent and phased pricing roadmap for the gradual realization of fuel and electricity prices; and ensuring sustainable financial resources while establishing resilient mechanisms for policy implementation.

Keywords

Subsidy system reform

electricity industry

Seventh Development Plan

Energy optimization

Subjects