October 14, 2008 / 8:47 AM / 11 years ago

Iran plans fuel subsidies cut on path to phase-out

TEHRAN (Reuters) - Iran plans to gradually cut from the next Iranian year the amount of heavily-subsidized gasoline motorists can buy and completely eliminate subsidies by 2011, an Iranian official said in comments published on Tuesday.

“We should go toward making the prices real and eliminate the subsidies,” Mohammad Rouyanian, head of Iran’s fuel management and transportation headquarters, was quoted as saying by the Aftab daily. Other newspapers carried similar reports.

Iran is the world’s fourth-largest exporter of crude, but lacks enough refining capacity to meet domestic gasoline needs, forcing it to imports large amounts which it then sells at subsidized prices, burdening the budget.

To curb soaring consumption, it launched rationing of subsidized gasoline in June last year, allowing motorists to only buy 100 liters per month at the price of 1,000 rials (around 11 U.S. cents) per liter.

The allocated amount was later increased to 120 liters per month after many drivers complained. Purchases above this limit cost four times more.

“Concerning the government’s policies of ending fuel subsidies by 2011, from next year the gasoline allocation for private cars will gradually be decreased,” Rouyanian said, referring to the 2009-10 Iranian year starting in March.

Reporting by Parisa Hafezi; Writing by Fredrik Dahl; Editing by William Hardy

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