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Iranian motorists start paying 25 pct more for fuel

TEHRAN (Reuters) - Iranians began paying 25 percent more for their gasoline on Tuesday, with some motorists criticising the oil-rich country’s move to raise the price but others noting it remained among the world’s lowest.

Iranians fill their cars with fuel at a gas station in Tehran in this January 21, 2007 file photo. Iran will hike the price it sells gasoline by 25 percent to 1,000 rials (about 5 pence) a litre from May 22, 2007, but it has delayed rationing fuel as previously planned, the state broadcaster reported. REUTERS/Caren Firouz/Files

“No problem, it is still cheaper than mineral water,” said Shahrooz Taebi, a 35-year-old engineer, as he filled up the tank of his new-looking Peugeot at a pump station in downtown Tehran.

After days of confusion, the government announced late on Monday the price of heavily-subsidised fuel would increase the following day to 1,000 rials (about 5 pence) per litre from 800 rials, but that planned rationing would be delayed.

Iran imports 40 percent of its gasoline needs because of a lack of refining capacity and fuel subsidies are a drain on the state coffers of OPEC’s No. 2 producer, prompting the government to take action despite risking anger among some voters.

President Mahmoud Ahmadinejad’s government says rationing and a higher price will help reduce Iran’s heavy reliance on expensive imports, particularly when Tehran faces further United Nations punitive measures over its disputed atomic programme.

World powers have already imposed two sets of sanctions on Iran for refusing to rein in its nuclear work, which they fear is aimed at making atom bombs. The United States has said Iran’s dependency on fuel imports gave Washington “leverage.”


Iran’s parliament had backed the plan to introduce the measures on May 22 to rein in consumption. But officials had been hinting at delays, citing technical and other reasons.

Rationing will now start around June 5, Interior Minister Mostafa Pourmohammadi told parliament, Iranian news agencies said, adding the volumes would be announced in a few days time.

Petrol stations in the capital were busy shortly before midnight as people stocked up on fuel, but appeared as normal on the first day with the higher price, media and witnesses said.

Fuel rationing and price rises are a sensitive issue in Iran where cheap, abundant fuel is considered a national right. Fuel price hikes in the past have quickly fed through to price rises for other goods. Inflation is already running at 17 percent.

“It will be difficult for people to pay this price,” said Sharif, 29, waiting in his car with his young family.

But a petrol station attendant said business was as usual and that people took the price hike, which dominated newspaper headlines, calmly.

“The Iranian people are not bothered by this,” he said.

Pourmohammadi suggested rationing was partly postponed because of technical hitches in making the electronic smart cards people will use to buy the rationed, subsidised fuel.

Economists say the subsidies encourage waste, hurt the environment and burden the budget. Iran last year spent $5 billion (2.5 billion pounds) on gasoline imports.

“Even with rationing, $2.5 billion of gasoline still needs to be imported in the current year,” Deputy Oil Minister Mohammad Reza Nematzadeh was quoted as saying.