Iran fuel rations spark anger, pump stations burn

TEHRAN (Reuters) - Angry Iranians torched pump stations and hurled abuse at President Mahmoud Ahmadinejad's government after the world's fourth-largest oil exporter said it was imposing fuel rationing on Wednesday.

One Iranian news agency, ISNA, quoted an official as saying 19 gasoline stations were set ablaze overnight in Tehran after the government's announcement late on Tuesday that rationing would start from midnight.

Police detained 80 people in the capital over the unrest, the Fars News Agency quoted a judge as saying.

"We are swimming in oil and all they do is just put pressure on people," said taxi driver Hasan Mohammadi, 44. "I'm using my last drop of gasoline."

Despite its huge energy reserves, Iran lacks refining capacity and must import about 40 percent of its gasoline, a sensitive issue when world powers have threatened new U.N. sanctions in a row with Tehran over its nuclear program.

Concerns Iranian imports would decline pushed down European gasoline paper prices on Wednesday, international traders said.

Some drivers scuffled while waiting to fill up their tanks before rationing began. Others chanted anti-government slogans and openly criticized Ahmadinejad, who came to power two years ago vowing to share out Iran's oil wealth more fairly.

"Last night, in addition to setting fire to and stealing property of 19 fuel stations in Tehran, people threw stones and damaged others," Bijan Haj Mohammadreza, head of an association representing gasoline stations, told ISNA.

Seeking to rein in soaring consumption and costly imports, the government on May 22 raised the liter price by 25 percent to 1,000 rials (11 U.S. cents) - still among the cheapest in the world - but rationing was delayed.

Drivers rushed to pump stations after the Oil Ministry said the scheme would finally go ahead after weeks of confusion.

Private cars will get 100 liters of gasoline a month but less if they also burn compressed natural gas, state TV said. All drivers need electronic "smart" cards to buy fuel.

One fuel station in Pounak, a poorer area of the capital, was set alight while another in eastern Tehran was partially burnt, two of its pumps destroyed by fire, witnesses said.

Windows at the one in Pounak were smashed, six pumps wrecked and walls blackened. State radio blamed "opportunistic elements". Police could not be reached for comment.

Judge Ali Namazi said 80 people were detained in Tehran and transferred to jail. "These people have destroyed public property," he told Fars News Agency.

INFLATION FEARS

Motorists still faced long lines on Wednesday in a country where many see abundant and cheap fuel as a national right.

Short of public transport, people rely on cars or taxis to get around in the capital of 12 million. Some taxi drivers raised their fares by 20-80 percent on Wednesday, media said.

"Last night's riots were an expression of the anger of people with lower incomes," said government employee Saeed Sameti, although he said he in principle backed rationing.

Parliament had argued for offering fuel above the rationed amount at market prices, a step opposed by the government which fears this would stoke inflation, already at 17 percent.

No announcement was made about whether drivers could buy extra fuel, but analysts said inflation would rise anyway.

"Either they are going to offer (extra fuel) at a high price or there is going to be black market at a high price," said Hatef Haeri, head of business consultancy ICG.

Hojjatollah Ghanimifard, National Iranian Oil Company international affairs director, in New Delhi said Iran might review the amount allocated to drivers in two months.

Haeri said Iran had no choice but to curb consumption because of the burden on state coffers. All fuel is sold at heavily subsidized prices, encouraging waste and smuggling.

The United States, which is leading efforts to isolate Iran over its nuclear plans, has said Iran's gasoline imports are a point of "leverage." Washington accuses Iran of seeking to build nuclear weapons, a charge Tehran denies.

(Additional reporting by Edmund Blair in Tehran and by Nidhi Verma in New Delhi)