IRAN: Iranian government has announced plans to ration gasoline and increase its price

President Mahmoud Ahmadinejad's government has announced plans to ration gasoline and increase its price. However the plans, which were backed by parliament in March, are being hampered by technical problems and have aroused concerns about the impact on the country's poor. Iran, OPEC's second largest oil producer, imports 40 percent of its petrol needs because of a lack of refineries, draining state coffers. It has announced a plan to limit the sale of heavily-subsidised fuel from May 22 and to raise the price. But with less than a week to go before this takes effect on Tuesday (May 22), motorists still do not know how many litres they will be allowed to purchase and at what cost. Media reports also cite hitches in the distribution of the electronic smart cards they will use to buy subsidised fuel. President Mahmoud Ahmadinejad, who came to power in 2005 vowing to share Iran's oil wealth more fairly, hinted at possible delays when asked if rationing would start on time. A group of parliamentarians has asked the president to define how much each motorist would receive under the plan. An Iranian official had said one idea was to give 90 litres a month to private motorists. The government says the plan will curb gasoline consumption to avoid the country's heavy reliance on expensive imports, particularly when Iran faces further U.N. sanctions over its disputed nuclear work. Ali Asghar Naderi, a Tehran resident says: "I agree on the plan of rationing gasoline, I mean under this plan the national capital and people's time would not be perished. Anyway it (rationing gasoline) can be a solution for the problem of heavy traffic". Analysts say Ahmadinejad's government, which draws much of its backing from Iran's poor, could get cold feet because the plan may stoke inflation, already running at above 17 percent. Mohammad Taghi Vakili another Tehran resident says: "It (rationing gasoline) would have a direct influence on the growth of inflation, and would cause the increase of prices". Analysts say petrol subsidies encourage waste, hurt the environment and burden the budget. Iran last year spent $5 billion (USD) on gasoline imports. Mohammad Darangi a taxi driver says: "I think under this plan (rationing gasoline) people would use public transportation instead of their own cars, more than before and it's better for all the people. I think it's better." But many Iranians regard abundant gasoline at the current price of 800 rials (9 U.S. cents) a litre -- among the cheapest in the world -- a national right. The plan would raise a litre of rationed fuel to 1,000 rials. Debate has raged since then about whether to allow drivers to buy extra fuel at international prices. Domestic gasoline consumption has increased by 10 percent per year over the past five years, while total energy subsidies reached 17.5 percent of gross domestic product in 2005-2006, according to the International Monetary Fund. World powers have imposed sanctions on Iran for refusing to rein in its nuclear work. The United States has said Iran's dependency on fuel imports gave Washington "leverage". The International Energy Agency (IEA), which advises 26 industrialised nations, said in a report that rationing and price hikes should help curb imports and raise fuel efficiency but warned it may provoke domestic opposition. A group of parliamentarians have called on Ahmadinejad to publicly specify how much fuel each motorist would receive. An Iranian official said one idea was to allocate 90 litres a month to private motorists, a figure many Iranians say is too low. Lack of public transport as a cheap alternative may add to frustration among hard-pressed Iranians, analysts say. The system with smart cards is designed to prevent drivers from selling rationed gasoline on the black market, but many Iranians have yet to receive their cards. Some petrol stations have also not yet installed the machines for using the cards.

ITN Source | May 18, 2007

Tags:. .encourage. .budget. .delays. .cents. .ali