NIOPDC Expects People to Buy Less Gasoline

EghtesadOnline: Gasoline consumption should decline by at least 10% in the coming three months, head of the National Iranian Oil Products Distribution Company (NIOPDC) said.

News ID: ۷۴۸۹۹۹

23 November 2019

“Consumption is now at 95 million liters per day and is expected to decline to 85.5 ml/d in less than 90 days,” Amir Vakilzadeh was quoted as saying by the Oil Ministry’s news portal.

Gasoline consumption declined by 20% on Nov 16 one day after a new plan (rationing and raising prices) came into effect, compared to the same day the previous week, but more time is needed to have accurate numbers, he noted.

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, Financial Tribune reported.

Eight years later in May 2015, the government announced gasoline would be sold at a single price (10,000 rials/liter)  without any restrictions.

NIOPDC announced Friday that gasoline was rationed and prices raised by at least 50%. The company produces 110 million liters of gasoline per day, of which 15 ml/d can be stored or exported via the Iran Energy Exchange.

Selling gasoline on the energy bourse started in August and was well received.

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 300%.

“Due to the low quality of domestically-manufactured vehicles, daily gasoline consumption in Iranian cars is over and above the global average,” he rued.

There are 16 million cars in the country and 8 million motorcycles which consume as much gasoline as needed by 3 million cars.

Improving the quality of cars can help curb consumption by at least 19 million liters per day. Nonetheless, it has been decades that carmakers have been oblivious to this simple fact mainly because there are more than enough customers for their clunkers with engines going back decades.

Upside Down

Vakilzadeh and independent observers believe that in Iran’s car industry things are upside down. In most countries fuel is expensive but car prices are affordable. In Iran it is the other way round. Moreover, locally-made cars are mostly of poor quality and better known as gas guzzlers.

When it comes to imported cars, one has to pay at least three to four times more in Iran. For example, the 2015 Honda Civic can be bought for $11,000 in neighboring Turkey. For the same vehicle one must pay at least $35,000 in Iran! Import of cars is banned in Iran for almost three years.

More importantly, comparison of public transportation in Tehran and some capitals in neighboring countries like Istanbul shows that providing people with decent public services is not a priority for urban planners in capital. Much more needs to be done to encourage people not to use their own cars on work days in the near permanently clogged capital.

Based on latest data, there are 320,000 cabs currently operating across Iran, over half of which should have long been assigned to the scrap yard.

Regarding public buses and the subway, these are old and  nor punctual, and during rush hours it is difficult to get in, especially with a baby in arms.

Some officials keep on chanting empty slogans that higher fuel prices will reduce consumption and they may have a point.

Nonetheless, the low-income brackets will have to pay much higher prices as prices of goods and services rise as soon as fuel prices go up. As for the high-income groups, (including most officials) the price of gasoline is the last thing on their minds. Their priorities lie somewhere else.

It needs mention that policymakers never forget to remind ordinary people that gasoline is very cheap and so long as prices do not rise, the public will keep burning and wasting.

What they intentionally refuse to say is the plague of domestically produced gas-guzzlers and the ageing and inefficient public transportation system that have long outlived their usefulness.