The impact of targeted subsidies plan on electricity consumption, sale, receivables collection and operating cash flow

Purpose - The purpose of this paper is to investigate the implementation of the targeted subsidies plan in the rural and agricultural sectors of Iran and its impact on the government’s sales income, operating cash flow (OCF) and receivables collection ratio. Design/methodology/approach - Using the panel data approach, the authors examine their hypotheses on a sample of six provinces of Iran, including Khorasan Razavi, Khorasan Jonoubi, Kerman, Semnan, Kermanshah and Kurdistan, during 2009-2013. Findings - The findings indicate that the implementation of the targeted subsidies plan leads to increased actual electricity sales in the rural sector. Further, while the coefficient on OCF in the estimated model suggests a significant and positive relationship between the OCF and the implementation of the targeted subsidies plan, the coefficient on receivables collection ratio demonstrates a significant but negative association. Contrary to the government’s primary expectations, the results do not provide any support for the reduction of electricity consumption. Originality/value - The current study is apparently the first study which conducted on the subject under study.