Majlis Has Yet to Decide on Proposed Gasoline Price

The Joint Budget Committee Thursday gave the nod to a dual-price system to distribute gasoline nationwide for the next Iranian year (to start March 21, 2007).

The committee comprising 23 members of the Budget and Planning Committee and 24 other members from 12 parliamentary committees had previously decided to supply gasoline at the price of 150 tomans ($0.16) per liter.

“However, the members reviewed the decision and finally approved a two-pricing system to distribute the product,” the committee spokesman Mohammad-Mahdi Mofatteh told reporters.

Majlis Speaker Gholam-Ali Haddad-Adel also said the lawmakers had not yet finalized the price of gasoline.

Seyed Kazem Delkhosh, who talked to PIN, said the Joint Budget Committee found the 150 toman price unaffordable and changed its decision.

The member of parliamentary Economic Committee added, “We proposed that the 43 million liter domestic production be rationed and the extra be soled at open market rate.”

He said fuel smuggling and run-down vehicles were among the factors that increased the gasoline consumption, adding the government needed to remove them as the dilapidated vehicles would be necessarily given a great share of petrol in the rationing system.

“The government’s bill on reconstruction of refineries does not work by itself and the cabinet is required to pay due heed to development, equipment, and renovation of heavy oil refineries to meet the growing demand for gasoline in the country,” Delkhosh noted.

He added if the government enforced Note 13, most of problems facing people would be settled.

“Note 13 aims to settle the crisis and curb the growing fuel consumption,” said Hamid-Reza Katouzian, the deputy of Industries Committee, adding Note 13 was put into practice in a bid to optimize the fuel consumption and to facilitate the transportation of the general public and reduce the traffic jam.

“Based on Note 13 goals, the government is serious about replacement of gasoline with gas through producing gas-fueled engines and setting up natural gas stations,” he added.

Government spokesman Gholam-Hossein Elham last Monday voiced the cabinet’s strong opposition to any gasoline price hike.

Elham made the statement at his weekly press briefing and reiterated that the government had always been against the rise in price.

“The increase in gasoline price will psychologically damage all parts of the economic sectors and the general public,” warned the spokesman, adding, “The budget law for the next (Iranian) year has drawn up a timetable that shows the way to reduce gasoline consumption without increasing the commodity’s price.”

He argued that the initiative would help save foreign currency and prevent economic pressure on people.

“The government is planning to change the gasoline consumption model and to offer replacements for gasoline,” said Elham, adding the production of gas-fueled vehicles was top on agenda.

Gasoline is sold at $0.09 per liter in Iran , where people see cheap abundant fuel as a right, but economists believe cheap gasoline encourages excessive consumption and a lucrative trade in contraband fuel to Iran "s neighbors.

The parliament approved a total of $5 billion for gasoline imports in the current Iranian year, which ends on March 20.

Iran has to import about 40 percent of the 70 million liters of gasoline it uses each day because of insufficient refining capacity.