Oil-rich Iran to ration petrol to get out of subsidy fiasco

TEHRAN, May 21, 2007 (AFP) – Oil-rich Iran is to delay a plan, scheduled to be implemented on Wednesday, to ration petrol and raise pump prices that is expected to have a profound impact on its economy, officials said. Iran has been unable to distribute sufficient rationing cards in time to consumers to execute the plan, which aims to reduce the colossal burden on the budget of subsidising the country’s frenzied petrol consumption.

“From May 22, petrol will be distributed only on production of rationing cards, but at the same price, 800 rials a litre (0.08 dollars),” said Mohammad Jafar Behdad from the presidential press office.

“The date for rationing petrol will be announced later and it is then that the price will increase to 1,000 rials a litre (0.10 dollars),” he told the Iran newspaper.

The plan takes a two-pronged approach to the problem by slightly raising petrol prices that are less than a comparable amount of mineral water and imposing a rationing system.

Under the rationing system, consumers will have to pay a higher price for any petrol they consume above a certain quota. But the government has yet to give any indication over the level of the quota or the higher price.

Jafar Behdad