Reza Pahlavi’s Iran Prosperity Project, funded by his proxy National Union for Democracy in Iran, aims to provide a roadmap for reconstructing Iran following the Islamic Republic’s fall.
Its authors envision a major role for energy reform in the country’s recovery. Iran is the third-largest producer of natural gas in the world, with about 17 percent of global reserves. However, because of corruption, sanctions, and poor management, winter gas shortages, summer blackouts, and disruptions to public services and enterprises continue.
Although Iran has an abundance of natural resources, long-standing governance shortcomings, deteriorating infrastructure, and distorted subsidies contribute to persistent crises.
To attract investment, later phases [of the plan] seek to diversify energy sources, reintegrate Iran into global markets, and carry out political and legal reforms.
To address these, the Iran Prosperity Project envisions three stages. Emergency Stabilization aims to provide for immediate energy demands for 100 to 180 days, if the international community lifts sanctions and unfreezes $120-150 billion in assets, giving it a cushion to eliminate waste and end ineffective subsidies. To attract investment, later phases seek to diversify energy sources, reintegrate Iran into global markets, and carry out political and legal reforms. The plan also envisions modernizing infrastructure and switching to market pricing. While the authors mean well and do a service by sparking debate, the strategy falls short.
The Iran Prosperity Project plan lacks practical information and risk-reduction techniques. The energy infrastructure of Iran is antiquated. Many power plants operate at less than 25 percent efficiency, while nearly 40 percent of gas and energy escapes through decaying networks. Despite acknowledging the need for retrofits and more capacity, the project lacks technical and financial implementation strategies. One major obstacle is governance: Established power networks, particularly those associated with the military, oppose attempts to combine the nuclear, renewable, gas, oil, and electricity sectors into a single authority. Reforms run the danger of delaying or failing absent a defined governance transition plan.
Reforming subsidies is yet another difficult task. Energy subsidies, which constitute almost 12 percent of Iran’s gross domestic product, are ingrained in Iranian society and politics. The Iran Prosperity Project calls for gradually eliminating inefficiencies, but it omits information about safeguards for disadvantaged groups. Subsidy reductions could exacerbate energy poverty and spark unrest in the absence of robust compensatory measures. Geopolitical unpredictability, any continued sanctions, limited legal protections, and dubious contracts are further obstacles to foreign investment. The strategy provides neither explicit transparency nor reassurances to allay investor fears.
Amidst economic uncertainty, the three-phase method necessitates coordination, but it provides few backup plans, leading to risks of delay or fragmentation during a crucial transitional phase. Despite support for innovation hubs and the growth of renewable energy, the project’s timetables are optimistic given Iran’s significant reliance on fossil fuels and the complexity of its regulations.
When the national grid is overloaded, power plants frequently operate at less than 40 percent efficiency or shut down because of a lack of fuel.
The project’s strategic goal is to boost the export of energy and engineering services to Central Asia and the South Caucasus. However, considering the continued unpredictability of domestic supply, these aspirations are implausible. Rolling blackouts forced businesses and institutions to close during the winter of 2024-2025. Gas shortages amounted to hundreds of millions of cubic meters daily. When the national grid is overloaded, power plants frequently operate at less than 40 percent efficiency or shut down because of a lack of fuel. This discrepancy suggests either a poor assessment of domestic circumstances or a miscalculation.
Although funding, availability of foreign technology, and technical capacity remain uncertain, Iran’s government and energy authorities are actively proposing new power plants and “smart energy coupons” as measures to address domestic energy challenges. Plans for gas-fired facility reconstruction lack dependable funding and explicit timelines. The Iran Prosperity Project’s allusions to “energy diplomacy” are neither strategically significant nor operationally specific. An omission that jeopardizes energy sovereignty is the conspicuous lack of any cohesive strategy for managing shared oil and gas resources with neighbors like Qatar, Iraq, Saudi Arabia, and Turkmenistan.
The Iran Prosperity Project’s energy plan, like the Islamic Republic’s itself, aims high but will falter due to Iran’s complexity, corruption, and inefficiency. As written, the plan appears more aspirational than attainable in the absence of a clearer strategy and attention to actualizing reforms. Realistic administration and assessment of Iran’s economic and geopolitical realities are essential to the country’s energy sector’s future, and any peaceful transition.
