Iran government denies plans to treble gasoline price

DUBAI Mon May 7, 2012 5:20am EDT

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DUBAI (Reuters) - Iran's government denied on Monday it would treble the price of gasoline as part of subsidy reforms that have been commended by the IMF but caused anger at home among a population struggling under Western trade sanctions.

In a statement carried by the Fars news agency, the office of President Mahmoud Ahmadinejad said talk of a threefold price increase - broadcast on Friday by Ahmadinejad's bitter critic, the speaker of parliament - was "entirely false".

Speaker Ali Larijani had said the government was looking to triple petrol prices and to double the cost of natural gas as part of a further stage of efforts to reduce spending on subsidies while trying to target relief at the poorest Iranians.

In the statement, Ahmadinejad's office said: "Comments published saying the government has decided to sell gasoline at 2,000 toman per litre are entirely false."

That price, equivalent to 20,000 rials, compares to the 7,000 rials - roughly 57 U.S. cents at the official rate - which Iranians now pay for petrol once they use up a 50-litre monthly allowance to purchase fuel at 4,000 rials.

The presidency said: "The government has never sought such figures in any of its programs and it has and will continue to put all necessary information directly to the people."

The government implemented the first-stage of its Targeted Subsidies Plan towards the end of 2010 in an attempt to wean the country off food and fuel subsidies. At the time, Ahmadinejad called it the "biggest economic plan of the past 50 years".

On Saturday, a parliamentary committee rejected its plans for the second stage of subsidy reform.

Critics have accused Ahmadinejad of pushing through a program of wasteful public spending that has caused soaring inflation and of using the reforms for his own political gain.

In contrast, the policy has been hailed by Iran's most powerful authority, Ayatollah Ali Khamenei, as an important means of distributing welfare in a more balanced way.

Last year the International Monetary Fund commended the Iranian government for the policy has which it said had led to a reduction in fuel consumption and inflationary pressure.

Yet the reforms coincide with tightening external pressure on Iran's economy caused by harsher sanctions imposed by the United States and its allies early this year.

(Editing by Alastair Macdonald)

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