Saturday, June 24, 2006

iran moves to tighten gasoline consumption

tehran preparing for likely sanctions

Saturday, June 24, 2006

-- Iran said Friday that it would stop importing gasoline in September and begin rationing it, ironic for a country that is OPEC's number-two exporter of crude oil. "As there is nothing provisioned for petrol imports in the second half of this year's budget ... the imports will naturally stop and petrol will be rationed," Oil Minister Kazem Vaziri Hamaneh said on state television.
some observers in tehran see the move as an step toward preparing for likely sanctions in refineries field.
The minister said imports will end from September 23, and that the government will decide at a meeting next week when to begin the rationing.

Iran's refineries have a capacity of 40 million liters of gasoline a day, but demand is close to 70 million liters.

Gasoline is extremely cheap in Iran thanks to massive subsidies. A liter of regular gasoline costs just 800 rials ($0,09). Super costs 1,100 rials ( $0.12).

An explosion in car ownership and gasoline smuggling to Iran's neighbors, where prices are far higher, has caused an explosion in demand. Iran loses more than $1 billion a year because of the smuggling. The shortfall has up to now been met by spending billions of dollars each year on imported gasoline.

In February, Iran's Parliament slashed the government's requested $4 billion budget for gasoline imports to $2.5 billion. That lower amount is predicted to have been spent in the first half of the Iranian year, which began on March 21, due to higher import prices and increasing consumption.

Parliament subsequently backed a government initiative to put the brakes on domestic gasoline consumption by limiting access to subsidized fuel.

The plan was approved during discussions on individual articles of President Mahmoud Ahmadinejad's budget for the current financial year, but has not yet been implemented.

Hameneh indicated Friday that it would not be put into action, but did not say why. It stipulated that car owners would be provided with "smart cards" that allow gasoline purchases at the subsidized rates up to a fixed ceiling, above which motorists would have to pay the full price.

The head of the Parliament's Energy Committee, Kamal Daneshyar, previously said that private cars and taxis would daily receive 3 liters, and 30 liters, respectively, at a subsidized price.
economic analysts suggest that gazoline will be top priority in pushing iranian strait through sanctions.
at same time,observers in tehran belives that the move is ahmadinejad administration step toward minimising impacts of likely sanctions.
previous to this move,the administration exercised some thightening economic policy in the fields of foreign goods such as mobile.
ali ghannadi-irannuk


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