CHAPTER FIFTEEN:

Energy

ARTICLE 119- Government is authorized to present to the Parliament in the annual budget bill the domestic sales prices of the energy carriers (electricity, natural gas, kerosene, gasoline, gas-oil, and fuel oil) as recommended jointly by the Ministry of Petroleum and Ministry of Energy.

ARTICLE 120- A- Income received from export of oil products, gas, liquefied gas and electricity, as the case may be, shall constitute income of the National Iranian Oil Company, National Iranian Gas Company, and Tavanir Company respectively; and will be spent to finance the foreign exchange costs of the current operation (including import of oil products and natural gas) and to implement capital investment projects approved by the Islamic Consultative Assembly.

The amount of the above investment shall be regarded as acceptable expenses for tax purposes and shall be included as the increased share of the government capital or that of the National Iranian Oil Company as the case may be.

B- A percentage of the foreign exchange income received from the export of oil, whose rate will be determined in the annual budget laws, will be entrusted to the National Iranian Oil Company within the framework of a mechanism to be approved by the Cabinet, and will be used in realization of the Plan’s objectives and in conformity with the current laws and regulations.

C- Export of oil products is permissible upon satisfaction of the domestic needs. The responsibility for securing the country’s needs and regulating the domestic market rests with the Ministry of Petroleum.

D- In order to reform the organizational structure of the state-owned companies affiliated to the Ministry of Petroleum and Ministry of Energy in line with the government policy to reduce government’s undertakings and to enhance economic and technical efficiency of these companies, and with due respect for the royalty of the oil and gas consumed domestically as the national capital, government is required to draw up the necessary draft bill during the first year of the Plan and submit it to the Islamic Consultative Assembly for approval.

ARTICLE 121- In order to economize and rationalize the consumption of energy and to protect the environment, government is required to take the following measures:

A- To prepare and codify the standards and technical specifications pertaining to the consumption of energy in equipment, processes, and the energy consuming systems in such a way that all the consumers, producers and importers of these equipment, processes and systems be required to comply with the said specifications and standards. The said standards will be drawn up by a committee consisting of the representatives of the Ministry of Energy, Ministry of Petroleum, the Iran Standards and Industrial Research Institute, the Department of the Environment, and the relevant ministries.

The manner of approval of these standards shall be determined by the Cabinet.

B- To prepare a by-law governing the working hours of the guilds during the year specially in the peak seasons of electricity consumption, by Ministry of Commerce in cooperation with Ministry of Energy and Ministry of the Interior.

C- To regulate the seasonal working schedule of factories and industries by the concerned ministries in such a way as to reduce the use of energy and electricity during the months of peak consumption, and to exercise incentive policies for the users during the non-peak hours.

Note: In the case of electricity black out that may cause damage, the consumers will be exempted from payment of “demand” and other relevant charges.

D- A committee composed of representatives of the Ministry of Housing and Urban Planning, Ministry of the Interior, Ministry of Petroleum, Ministry of Industries, Ministry of Energy, the Plan and Budget Organization, and State Engineering Order, shall draw up regulations and criteria for observing the energy consumption standards in design and construction of buildings in the governmental and non-public sectors, aiming at avoiding waste of energy, and to regulate and execute incentive methods for the existing buildings to use the energy consumption standards.

Note: The units whose annual consumption of fuel exceeds five thousand (5000) cubic meter equivalent of the fuel oil, or their utilized power is over five (5) megawatts, and they do not comply with the standards, criteria and the approved by-laws stipulated in this Article within a reasonable grace period, are obliged to pay a higher price for the energy they consume.

The executive by-law of this Article shall be prepared by the Plan and Budget Organization and the relevant executive agencies and approved by the Cabinet.

ARTICLE 122-

A- Ministry of Petroleum is authorized to issue permit to build refinery and production units for other products related to the oil industry, to the cooperative or private sector applicants , individually or through joint venture, who could demonstrate that they possess sufficient financial means to undertake the work and their projects are technically, economically and environmentally justifiable. The said ministry is required to take necessary action in the frame of a contract agreement to supply their required material and to purchase their products at the international prices (whenever necessary), and also to issue export permit for the products in excess of domestic consumption.

B- Ministry of Energy is authorized to issue permit for building power plant and production of electricity to the applicants of the cooperative or private sector individually or through joint venture with a foreign party possessing sufficient financial means and having projects from the technical, economic and environmental standpoints; and to determine the conditions including facilities to convert the income to foreign exchange and to issue purchase guarantee for the electricity produced by these units.

C- In order to encourage other domestic entities to enter into production of electric power through the power plants that are not managed or supervised by Ministry of Energy, Ministry of Energy is required to determine and promulgate on yearly basis the conditions and the guaranteed prices of electricity.

D- Ministry of Energy is authorized to divest part of the installations at the distribution voltage and properties of the regional power companies and the Khuzestan Water and Power Company to the electric power distribution companies. Equivalent to the value of the divested properties and shares of the electricity power distribution companies shall belong to the regional power and the Khuzestan Water and Electricity Company.

ARTICLE 123- Government is authorized to approve and convey for execution, the financial and employment regulation of the Atomic Energy Organization on the basis of the by-laws which will be prepared by the Atomic Energy Organization, the State Administrative and Employment Affairs Organization, and Ministry of Economic Affairs and Finance, irrespective of the Public Audit Law, the State Employment Law and other public regulations.