Iran Ride-Hailing Services Agitated About Fuel Rationing

EghtesadOnline: The government of President Hassan Rouhani is mulling reintroduction of the gasoline rationing system that ended in 2015 and the restrictions could, and very likely will, harm ride-hailing companies, with drivers already complaining about low fares.

News ID: ۷۴۶۱۶۰

28 October 2018

Gasoline was rationed in 2007 to curb overconsumption. At that time motorists could buy 60 liters of subsidized fuel each month with a special card at 7,000 rials (70 cents) per liter (at the time one dollar fetched 10,000 rials). Taxis were eligible for 600 liters a month.

The e-Commerce Union spokesman Reza Olfatnasab told local news website Zoomit.ir, “Authorities are apparently discussing the reintroduction of the gasoline rationing scheme for some time now. However, no final decision has been made. Whatever that may be, it will certainly impact the work of online taxi services and ride-hailing companies.”

Elaborating the point, he said, “So far no decision has been made about assigning spherical quotas to drivers working with ride-hailing firms. However, if the gasoline rationing plan is reintroduced, we hope authorities will also consider the needs of such drivers since big numbers of residents depend on their services. If those in charge fail to offer incentives to online taxi drivers the cost of urban transport will see a big jump.”

According to Financial Tribune, Olfatnasab says on a daily basis, ride-hailing firms like Snapp and Tap30 process close to 2 million requests for services across the country. Some 500,000 drivers work for the two companies.

Furthermore, considering the raging inflation in Iran, along with prices of basic goods, costs of auto maintenance services have skyrocketed. Drivers with ride-hailing firms, who are already hard-pressed by the economic crisis in the country, often complain about low fares and their meager income. According to the drivers they can hardly make the ends meet.

“With the help of mobile applications used by ride-hailing companies, mileage and fuel consumption can be calculated for each cab. These firms can provide authorities with all the information they want on each driver’s activities and gasoline needs.”

> Conditional Support

In response to the anxiety of ride-hailing firms, the secretary of Iran’s High Council of Traffic Management told ISNA in order to get government support, online taxi services should submit to municipal oversight over their activities.

Pouria Mohammadian Yazdani says, “Online taxi companies should agree to collaborate with the authorities and accept municipal oversight. If that happens, they will get the incentives.”

He stressed that ride-hailing firms must be regulated by the municipalities. In recent weeks heated debates have been reported between ride-hailing companies, municipalities and the e-Commerce Union about who has the right to regulate the work of online taxi companies.

Municipal authorities say just like the traditional taxi services, ride-hailing companies should operate under their rules. However, as per prevailing regulations, online taxi firms only need to get permits from the e-Commerce Union and have no other compulsions.

> Gasoline Rationing Plan

The national currency rial has plunged to unprecedented lows since April. On Saturday, the US dollar was sold for 139,000 rials in Tehran. Six months earlier it hardly fetched 42,000 rials.

Iranians burn an estimated 100 million liters of gasoline every day, one-third of which is imported. The fuel is currently sold at the subsidized rate of 10,000 rials (7 cents). Given the mounting economic problems, experts and government officials insist the “excessively cheap fuel is a luxury” Iran can no longer afford.

Oil Minister Bijan Namdar Zanganeh told reporters last week, “The government does not intend to increase prices at the pumps. However, large consumers who exceed reasonable limits should be required to pay more.”

According to Zanganeh, the rationing system in addition to curbing consumption will also help combat rampant fuel smuggling in regions bordering Afghanistan and Iraq. Moreover, the government will not have to import 30 million liters of gasoline per day to meet growing demand.

Noting that no decision has yet been made on raising gasoline prices or about rationing, he said his ministry will be in charge of determining the new prices and the exact dates will be announced.

"If revived, the quota system will be implemented all over the country and not only in the border regions.”

Observers speculate that fuel prices can triple reaching 30,000 rials per liter (22 cents).