* Price up by 25 percent per litre of diesel
* Fuel for industry, coming harvest in short supply
* Military use for tanks increased
(Adds details and quotes from business leaders)
By Suleiman Al-Khalidi
AMMAN, May 16 Syria has raised the price of
state subsidised diesel by a quarter, after doubling electricity
prices, as a shortage due to reduced imports threatens industry
and the use of machinery for the coming wheat harvest, while
military use has increased.
Syrians have been grappling with fuel supply shortages for
months as Western sanctions, imposed in response to the
government's crackdown on a revolt that has cost thousands of
lives, has prompted most European oil firms to cut trade.
The government increased the cost of a litre of gasoil,
used as diesel in vehicles and as heating oil, to 20 pounds (31
cents) from 15 pounds, the first price change since May last
year when the authorities cut it by the same amount.
International trading sources have said Syria was facing a
halt in imports of diesel, needed to power army tanks and other
heavy vehicles, as a stream of shipments from Russia and
elsewhere has dried up in recent weeks.
Wednesday's announcement was published on the Syrian state
news website SANA.
The authorities have justified the moves as a step to curb
smuggling and increase government revenues, saying the annual
cost of subsidies topped 250 billion pounds. Syria says it
subsidies almost two thirds of the cost of gasoil.
Officials say annual consumption is around 7.5 billion
Some industrialists welcomed the move as a step towards
reducing subsidies that created market distortions during a
period of civil upheaval.
"Gasoil has to be liberalised because it's already being
sold at higher prices and those who have been benefiting from
this are people in the black market, so let this increase go to
the state," Essam Zamrick, vice president of Damascus chamber of
industry told Reuters.
Local traders and residents say severe shortages in rural
areas and some cities hit by major violence, such as Homs, Idlib
and the eastern province of Deir al-Zor, have allowed
blackmarketeers to resell subsidised gasoil at a hefty premium.
The gasoil price increase follows last week's doubling of
electricity prices, which industrialists have warned would deal
a heavier blow to struggling plants already hit by the unrest.
"This will hurt industry already facing losses and could
lead to closures," Faris Shahabi, head of Aleppo's chamber of
industry, was quoted by local media as saying.
Shahabi said the authorities should have given priority to
helping industrialists, rather than focus on raising revenue.
Businessmen said the price increases reflect growing
official concern about a steep drop in government revenues that
was worsened by the heavy cost of subsidising fuel and
electricity at a time when the country faces a foreign currency
Others said electricity price rises that exempted households
- which account for 55 percent of the country's total
consumption - agro-industry and small workshops, would limit the
inflationary impact at a time when prices of basic commodities
have been soaring.
Hotel owners and restaurants appealed for an exemption from
the power price rises as their revenues have plummeted.
"The circumstances the tourism sector is facing means it
cannot also incur an rise in electricity prices and this will
contribute to the closure of a number of large investments that
are already struggling to repay debt let lone now after the
hike," said Mohammad Rami Martini, the head of Syria's Chamber
of Tourism lobby group.
Tourism was once the country's key hard currency earners.
The timing of the rise in gasoil, at the start of the wheat
harvest season, threatened to raise costs for farmers already
unable to secure enough fuel for tractors, pumps and other
agricultural machinery, commodity traders said.
"With the drop in agricultural production in areas that are
now battlegrounds, even these rises, which are not that big,
will push costs up and ultimately consumers will suffer," said
Ali Anwar, a industrialist in the southern city of Deraa, who
owns a tomato processing plant.
(SYP = $0.015)
(Reporting by Suleiman al-Khalidi; Editing by Anthony Barker)