Water supply and sanitation in Iran has witnessed some important improvements, especially in terms of increased access to urban water supply, while important challenges remain, particularly concerning sanitation and service provision in rural areas. Institutionally, the Ministry of Energy is in charge of policy and provincial companies are in charge of service provision.
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Access
The sector is characterized by a wide discrepancy in coverage of water and sewerage services, as well as between urban and rural areas. The Joint Monitoring Programme for Water Supply and Sanitation of the WHO and UNICEF, which monitors access figures based on national surveys and censuses, estimated access in Iran from the results of the censuses of 1996, 2006 and 2011 as well as a 1995 Multiple Indicator Cluster Survey. According its estimates, in 2011 access to an improved source of water supply was 98% in urban areas where more than two thirds of Iranians live. It was 90% in rural areas (87% house connections). Access to sewerage in urban areas was estimated at 19% in the late 1990s. Access to improved sanitation was estimated at close to 100%.
History and recent developments
Up to 1990 the water and sanitation sector was highly decentralized. Most water and wastewater service provision was the responsibility of municipalities and provinces. This was changed through a fundamental sector reform in 1990 with the ratification of the Provincial Water and Wastewater Companies Law of September 1990.
In September 2003 the Government of Iran and the World Bank agreed on a sector strategy with the targets for improved cost recovery and collection and increased efficiency. It is not clear what were the baseline data in 2003 and to what extent progress has been made to reach these targets.
In November 2008 the government announced that it has approved the construction of 177 dams nationwide. Dams in Iran serve primarily for hydropower generation, irrigation and flood control. However, one of the projects will provide drinking water and water for industrial use to the cities of Qom, Golpaygan, Delijan, Saveh, Khomein and Nimvar in the central provinces of Qom, Isfahan and Markazi.
In April 2012, the government launched a project to transfer Caspian Sea water to the central regions of Iran, bringing about 200 million cubic meters (7,062 cubic feet) of water per year.
In April 2016 Deputy Minister of Energy Sattar Mahmoudi said that six major cities - Bandar Abbas, Shiraz, Kerman, Mashhad and Hamadan - faced acute water shortages, and water resources were under strain in another 450. Parts of Iran have faced droughts for the past 15 years.
Achievements and challenges
Since the 1980s access to urban water supply has increased from 75.5% to 98%. According to one Iranian observer, the water quantity supplied has increased and the quality has improved. He concludes that the reform has been “very successful” and is “an example of best practice” that should “be proposed to other countries.
However, a number of challenges remain. According to the World Bank, the sector is affected by “low water use efficiency in urban and rural uses; limited participation by stakeholders in development planning and management; large needs for rehabilitation and development of hydraulic infrastructure for sustainable water usage; problems of pollution caused by the discharge of untreated wastewater into public waterways and aquifers; and weak institutions involved in the sector and limited coordination among stakeholders.” Still according to the World Bank it is also characterized by “poor performance of water supply and on-site wastewater disposal facilities, causing increasing risk for ground and surface water pollution and health and environmental risks resulting from the discharge and re-use of untreated effluent for irrigation; limited technical, institutional and financial capacity of water and wastewater companies; a lack of clarity of institutional responsibilities of sector entities; and non transparent and inadequate tariff structures and levels.”
Policy
The Ministry of Energy, through its Deputy Ministry for Urban and Rural Water and Wastewater Management, is in charge of setting sector policies. The Deputy Ministry of Water Affairs in the same Ministry is in charge of water resources management, together with eleven Regional Water Boards. The Environmental Protection Organization is in charge of water pollution control. The Ministry of Health and Medical Education is responsible for setting drinking water quality standards, as well as monitoring and enforcing them. The National Water and Wastewater Engineering Company (NWWEC) provides oversight and assistance to service providers in areas such as investment planning, human resources development, and in the establishment of standardized systems and procedures. The National Economic Council sets tariff policy for the whole country, with some differentiation across regions.
Service provision
In 2008 sixty companies were responsible for the provision of water and wastewater services. Evenly spread over Iran’s thirty provinces, each province has one urban and one rural water and wastewater company (WWC). The 60 companies had 38,000 employees. Only Tehran has two separate companies for water and sewerage. In all other provinces, water and sanitation services are provided together. The regional water boards provide bulk raw water through transmission pipelines to the water and wastewater companies, which treat and distribute it.
The state-owned WWCs are able to manage their day-to-day operations with a measure of autonomy where Managing Directors can make most decisions on operations and staffing within the limits of the centrally authorized staffing levels and with some flexibility to provide extra compensation to well performing employees. However, the WWCs do not control their own investment programs and, therefore, have limited scope to improve investment and operating efficiency and the level and quality of service. Moreover, the WWCs have to follow an organizational model developed by the NWWEC and cannot select a model that would be more appropriate for their particular situation.
Investment
Until 2005, the national budget for the water sector stood at 1,400 billion rials while it has reached 3,500 billion rials (US$350 million using the official exchange rate) in 2008. This budget apparently includes multi-purpose dam and irrigation as well as water supply and sanitation. The government said in 2011 that investment needs stood at US$150 billion over the next 15 years, 20% of which should be financed by the private sector.
Cost recovery
On average, the service providers do not recover operation and maintenance costs due to low tariffs and low bill collection. For example, the Provincial Water and Sewerage Companies for Ahwaz and Shiraz have been incurring significant net losses at least prior to 2004. The financial performance of the companies is further aggravated by high water losses of 38% in 2002/03 in Ahwaz and about 30% in Shiraz. Of the water that has been billed, only about 73% was collected in 2002/03 in Ahwaz, while it was higher in Shiraz.
Tariffs
The current urban tariff system is based on a fixed fee that depends on the size of the connection pipe and on the type of customer (household or other types), and on a volumetric charge based on increasing block-tariffs. The fixed fee, or the subscription fee, was about 2,000 Rials in 2004 (25 US cents) for most domestic customers while the structure of variable tariffs is based on a complex formula. The formula is the same for all companies and there is no volumetric charge if consumption falls below 5 cubic meter per month. Above this minimum, the tariff increases with the level of consumption and generally varies across companies. The average volumetric tariff for the country stood at about 6 US cents in 2002. It varied from 2 cents for monthly consumption below 20 cubic meter, to about 4.5 cents and 12.5 cents respectively for 20-40 and for more than 40 cubic meter of monthly consumption.
According to the World Bank, the rate structure is needlessly complex for both volumetric rates and connection fees. Volumetric tariffs are based on complex formulas that differ across consumption brackets and water and wastewater companies. Because of this complexity the tariff structure lacks transparency. Moreover, the structure is such that rates increase by more than threefold when consumption rises from 20 cubic meter or less to slightly higher volumes. Regarding sewage bills they are currently levied and collected only in neighborhoods where a network exists and are a percentage of water bills (70%).
Average connection fees are about US$310 for the whole country and the minimum fee is approximately equal to US$l50. With a few exceptions, the connection fee for wastewater is the same as that for water. These fees have been regularly increased between 1999 and 2003, at the rate of 10% annually with the exception of the year 2000 in which the fee was increased by 15%. In addition to connection fees, the water and wastewater companies charge the customer the full cost for house connection.
Additional reading
Peter Beaumont, Water Resource Development in Iran, in The Geographical Journal, Vol. 140, No. 3 (Oct., 1974), pp. 418–431, at JSTOR