Iran Hikes Price of Petrol by a Third

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Last updated at: (Beijing Time) Saturday, April 05, 2003

Iran Hikes Price of Petrol by a Third

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Iran raised the price of petrol by between 30 and 35 percent Saturday, risking a rise in inflation, press reports said. The price hikes are part of the country's annual budget and take effect immediately.

Standard petrol increased by 150 rials (1.9 US cents) per liter to 650 rials (8.12 US cent) and super went up by 235 rials (2.9 US cents) to 900 rials (11.25 US cent) per liter. The Iranian government has predicted inflation of 15.5 percent for the current financial year, which started on March 20, but analysts believe that a rise in petrol prices ran the risk of pushing that figure higher.

Tehran has decided to impose a series of taxes to increase the price of petrol in a bid to discourage the use of private vehicles, cutting fuel consumption and easing pollution, particularly in the capital.

Economic experts believe, however, that the rise was not enough to decrease consumption as poorer people usually tavel by public transport and not in private cars, but it was expected to lead to a rise in the cost of all other commodities. According to official figures, petrol consumption increased by ten percent to 50 million liters per day last year compared to the previous year.

Iran was forced to import one billion dollars' worth of petrol last year to meet domestic demand and the government paid out more than three billion dollars in petrol subsidies.

The "real" price of petrol is three times more than its present price at the pumps. The smuggling of petrol to countries neighboring Iran, where the petrol price is higher, has increased to around one million liters.

In Turkey and Pakistan, petrol costs about one dollar per liter and in Afghanistan more than 50 cents. Iranian cars are mostly old and consume on average 17 liters per 100 km, three times more than European vehicles, and some may use as much as 22 liters per 100 km.

Source: agencies

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