TEHRAN: Iran has reduced the ration of heavily subsidized gasoline motorists can buy each month, an official said Saturday, in a tentative first step toward slashing long-standing government price supports. Iranians have been expecting a big rise in the price of gasoline for the last three months as the government starts to phase out the $100 billion spent annually to hold down prices of essentials like fuel and food. Amid fears over a hostile public reaction, gasoline subsidies which allow Iranians to fuel their cars for just 1,000 rials (about $0.10) per liter had not been touched until now and the measure announced Saturday was less severe than expected. People rioted when the government started rationing subsidized petrol in 2007 and some analysts say big price hikes could reignite unrest which flared after President Mahmoud Ahmadinejad's disputed re-election last year. Iranian politicians have discussed cutting subsidies for years to stem wasteful consumption of valuable resources but Ahmadinejad has finally pushed the measure through at a time when Iran is under increasing pressure from sanctions imposed by countries concerned about its nuclear program. Recent sanctions have targeted a vulnerability caused by Iran's lack of refining capacity which means the world's fifth-largest oil exporter has until recently had to import up to 40 percent of its gasoline needs. US sanctions punish companies that sell gasoline to Iran and European Union measures ban the sale of equipment which can be used in Iran's refining sector. The Iranian official in charge of rationing said subsidies would be cut in the next Iranian month, which starts Wednesday, three months later than initially anticipated. But rather than raise the price of fully subsidized gasoline, the ration will be trimmed, with each motorist allowed 50 liters per month, down from 60 liters. Beyond that amount they have to pay a "semi-subsidized" price of 4,000 rials. "Government support for vehicles will decrease by 15 percent in (the month of) Dey and the price of rationed gasoline will be the same," Mohammad Royanian, head of Iran's Transportation and Fuel Management Office, was quoted as saying by state broadcaster IRIB. Earlier, the government denied a newspaper report which quoted the economy minister as saying the gasoline price would rise seven-fold. The total amount of fully subsidized fuel sold in Iran will be cut to 39 million liters per day from 45 million liters, Royanian told the semi-official Fars news agency. Iranians consume some 61 million liters per day, according to the Oil Ministry. Officials announced in September that an emergency plan to refine gasoline in petrochemicals plants now meant Iran no longer needs to import the fuel. Iranians fear the home-made fuel is of lower quality and has contributed to a big increase in pollution, something the government denies. Consumers and many politicians fear subsidy cuts could cause inflation to soar from the official rate of around 10 percent, something which could increase dissatisfaction with Ahmadinejad's government. One member of parliament, Dariush Qanbari, said direct cash payments that the government has promised to pay to poorer families will not make up for price hikes. "Based on what economy experts have said the country's inflation rate will increase by 20 to 70 percent in the coming year and the government's compensation policy should be such that the weaker segments of society can meet their basic needs," Qanbari told the semi-official ILNA news agency. Meanwhile, Turkmen delegation headed by Deputy Prime Minister Baymurad Hojamuhammedov will discuss issues of cooperation in oil and gas industry in Tehran Saturday, the official Turkmen source said. A new contract for additional sale of Turkmen natural gas is being prepared in connection with the introduction of a new gas transportation system linking the Turkmen Dovletabad gas field and Iranian settlement of Sangbast. Under the project, the gas pipeline would provide an opportunity to increase supply up to 12 billion cubic metres of gas annually. Taking into account the Korpeje-Kurt Kuy gas pipeline operating in West Turkmenistan, Iran will annually purchase from Turkmenistan up to 20 billion cubic meters of gas in total.
