Iran: New Quotes, Prices for Gasoline

EghtesadOnline: The National Iranian Oil Products Distribution Company (NIOPDC) announced Friday that gasoline has been rationed and prices raised by at least 50%.

News ID: ۷۴۸۹۵۱

16 November 2019

“Private car owners can buy 60 liters of subsidized gasoline every month with a fuel card at 15,000 rials (13 cents) per liter, up 50%. Additional purchases (maximum 250 liters a month) will cost 30,000 rials (26 cents) per liter, up 200%,” IRNA quoted the state-run NIOPDC as saying.

Motorists wanting more than 310 liters a month must fill up with the cards of gas station attendants. Premium gasoline, marketed as ‘super’ costs 35,000 rials (30 cents) per liter.

Using subsidized gasoline is only possible with fuel cards that will be charged by as much as 60 liters every month and the unused fuel can be saved for a maximum period of six months, according to Financial Tribune.

Car and motorcycle owners who either do not have or have yet not received their fuel cards can still fill up using the special cards of gas station attendants at 30,000 rials per liter.

Elaborating on the new plan, the company said CNG hybrid taxis can buy 200 liters of subsidized gasoline per month, but the figure stands at 400 liter for non-hybrid cabs.

The quota for motorcycles is 25 liters per month.

CNG hybrid vans are entitled to 90 liters of subsidized fuel per month. However, non-hybrid vans can buy 250 liters of subsidized regular gasoline per month.

NIOPDC set a quota of 500 liters per month for ambulances.

As per the directive, vehicles belonging to state-owned companies are not allowed to use subsidized gasoline. The company added that diesel and CNG prices at 2.5 cents per liter and 6,570 rials (4.6 cents) per kilo have not changed.

According to NIOPDC, close to 90 million liters of gasoline is used every day and is expected to surpass 100 ml/d by March 2020.

Fuel quotas (60 liters per car per month) were first introduced in 1981 one year after the start of the 1980-88 Iraq-Iran war and again in 2007. In six months consumption fell by 25 million liters. Eight years later in May 2015, the government announced gasoline would be sold at a single price of 10,000 rials without any restrictions and the fuel cards seemingly became a thing of the past.

Surprise Move

The surprise move to raise and restrict gasoline sale comes hardly a day after Oil Minister Bijan Namdar Zanganeh said on Thursday that fuel prices would not change in the near future.

In addition to the minister, almost all officials and lawmakers had reiterated in their speeches that due to the anticipated inflationary impact prices would remain unchanged.

Undoubtedly, the hike in fuel prices can generate more revenue for the government to buy basic goods, medicine and pay civil servants, workers and pensioners, but it will definitely put low-income groups under added pressure.

Inflation is around 40% and the economy under stress, according to the International Monetary Fund, which has predicted that the economy will contract by 9% this year. Many in the army of unemployed rely on cheap petrol to work as private cabbies.

Mohammad Baqer Nobakht, head of Plan and Budget Organization has claimed that about 60 million people out of the 82 million population will get extra monthly bonus to compensate the rise in petrol prices. He did not provide details.

“President Hassan Rouhani has said that all the extra income should be paid back to the people,” Nobakht announced at midnight, in a move to alleviate public concern about the decline in purchasing power soon after fuel prices rise .

“The first payments will be made within the next week or 10 days.”

According to the official, annual subsidy allocated for gasoline is $20 billion and experts believe the massive subsidy has created a yawning gap between gasoline prices in Iran (7 cents) and neighboring countries at around 100 cents. Scrapping fuel subsidies and raising tariffs had been a long expected priority of the Oil Ministry.