Iran to sell extra petrol at higher price
Tehran, February 23, 2008
Iran has 'no choice' but to implement a plan to offer drivers extra petrol at a higher price outside a subsidised rationing system even though it will increase inflation, a minister said.
A government committee has proposed making fuel available at up to seven times the current subsidised price available under a rationing scheme in place since June.
The government had previously opposed the move because of the inflationary impact.
Iran is the world's fourth-largest oil producer but lacks refining capacity and imports large amounts of petrol, which it then sells at the heavily subsidised price of 1,000 rials, roughly 11 US cents, a litre.
Under the proposal, drivers would still be able to buy 120 litres a month at the subsidised price but could then buy extra fuel at between 5,000 and 7,000 rials (55-77 US cents).
'Naturally, a rise in petrol prices will raise inflation but in regard to the necessity of the issue, some products should be offered to people freely (outside rationing) and unsubsidised,' Economy Minister Davoud Danesh-Jafari said.
'Many of our people, if they are in need of fuel, and they have no access to it, they are willing to get it at a higher price from others,' he told Mehr News Agency, adding fuel was 'very much more valuable' to people than 1,000 rials a litre.
Some drivers, who complain the rationing scheme does not give them enough fuel, already turn to a higher priced black market to buy extra petrol.
'There is no choice but for the consumer to pay the full price and offering gasoline at a free market price will raise inflation,' the minister said, adding the government also needed to take steps to minimise the inflationary impact.