Iran Economy NewsIran again delays phasing out fuel subsidy-agency

Iran again delays phasing out fuel subsidy-agency

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Reuters: Iran will continue to provide motorists with rationed gasoline for another month, again delaying a risky fuel subsidy cut feared to ignite street protests in the Islamic state, a senior official was quoted as saying by the students’ news agency ISNA.

TEHRAN Nov 21 (Reuters) – Iran will continue to provide motorists with rationed gasoline for another month, again delaying a risky fuel subsidy cut feared to ignite street protests in the Islamic state, a senior official was quoted as saying by the students’ news agency ISNA.

The subsidy phase-out had been due to start in the second half of the Iranian year, which began on Sept. 23.

“The 60 litre rationed gasoline will be given to motorists for the (Iranian) month of Azar (starting on Nov. 22). The allocated amount will remain unchanged,” Mohammad Royanian, head of Iran’s Transportation and Fuel Management Office, told ISNA.

Critics of the bill, which the government hopes to save up to $100 billion by ending subsidies on fuel and food, say it will push up prices and could renew the popular unrest that followed President Mahmoud Ahmadinejad’s disputed re-election in 2009.

Authorities deny opposition claims that the vote was rigged.

Under a rationing scheme, introduced in 2007, a motorist can buy 60 litres of subsidised fuel per month for just 1,000 rials per litre (around $0.11), and beyond that amount they have to pay a “semi-subsidised” price of 4,000 rials.

Riots erupted when the state started rationing subsidised fuel, which can still be bought for 1,000 rials (around $0.10) per litre.

The issue of gasoline subsidy is particularly sensitive because sanctions over Iran’s nuclear programme which have been tightened in recent months have restricted imports of the fuel. Increasing pump prices is aimed at cooling demand as well as saving state cash.

Iran said in September it had achieved a massive increase in its refining capacity and no longer needed to import the 20 million litres of its 64 million-litre daily consumption, something traders said they doubted was possible.

The government refuses to make public the exact timing of full implementation of the fuel subsidy cut but to ease the pain of sharp price increases on things like motor fuel, cooking gas and electricity plans to make direct cash payments to millions of poorer families.

Iran, the world’s fifth-largest oil exporter, has been hit by international sanctions over its disputed nuclear programme, which the West suspects is aimed at making bombs. Tehran denies the charge.

Analysts say the bill could inevitably stoke the inflation, now running officially at around 10 percent. But many politicians and clerics doubt official figures and Ahmad Tavakoli, the head of parliament’s research centre, has said inflation could reach 50 percent this year.

The government used to announce the gasoline ration for a season but as a shift in policy it now announces the ration for a month. (Reporting by Mitra Amini; Writing by Ramin Mostafavi; Editing by David Holmes)

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