Iran: Smart Fuel Cards Mandatory From August 11

EghtesadOnline: The plan to restart the use of smart fuel cards will come into effect in two months.

News ID: ۷۴۷۴۶۱

01 June 2019

As per a directive issued by the National Iranian Oil Products Distribution Company, car owners as of August 11 will be able to buy fuel at the pumps only if they have a smart fuel card, IRNA reported.

According to NIOPDC, using gas station owners' cards instead of car owners' smart cards will be illegal from the day the new rule takes effect.

The directive said the plan, which was first implemented in 2007, has nothing to do with fuel rationing as had been rumored over the past few months when gasoline prices, the cards and rationing issues became the talk of the town, Financial Tribune reported.

Last December the state-owned company informed car and motorcycle owners to reactivate their old fuel cards or apply for new ones. An estimated two million vehicle owners have registered for the new cards and more are to complete the registration process in the coming weeks.

To help reduce the cost of issuing and managing millions of new cards, the Central Bank of Iran has said that bank debit cards can also be used as fuel cards. The base data would be the national ID numbers of vehicle owners and the relevant information would be stored in the database.

"In the coming weeks all the technical tools will be in place to restart use of fuel cards at the pumps," NIOPDC said.

The government says reintroduction of the program is related to plans to reduce consumption and minimize fuel smuggling in the border regions. Illegal trade in fuel in and across the border regions, going on for decades, is said to be around 20 million liters per day worth $1,332,000.

An odd and more disturbing fact is that the government and those in charge have never been able to end this scourge and monumental loss to the treasury.

Data from the Anti-Smuggling Organization show that compared to last year fuel smuggling has risen by 50% in border regions, namely to Pakistan and Afghanistan where the fuel sells for much higher prices and so the trafficking temptation is high.

Some sources have said that due to lack of proper controls and monitoring systems, a substantial portion of the contraband crosses the porous borders “before the tankers reach the pumps.”

Fuel smuggling became more widespread problem since the spring of last year after the rial tanked and fell to unprecedented lows against all major currencies due to the new US sanctions. The severe restrictions were imposed after Washington abandoned the 2015 landmark nuclear deal Iran signed with the six major powers (five permanent UN Security Council members plus Germany).

NIOPDC produces 105 million liters of gasoline per day. Motorists bought 2.82 billion liters of gasoline in the first fiscal month that coincided with the Persian New Year holiday season. Last year same time 2.7 billion liters were sold.

As per official data, average daily gasoline consumption has increased from 87.1 million liters last year to 91.2 million liters now, thanks in part to the large number of gas-guzzlers, old engine technology and the inability and unwillingness of carmakers to improve quality to global standards.