Iran’s oil minister says except rationing and a price increase for fossil fuels there is no other way to prevent smuggling.
As a big oil producer Iran heavily subsidizes fossil fuels, especially gasoline and kerosene. But the country does not have enough refining capacity, so it has to pay additional costs for a significant portion of refined products.
The subsidized fuel is much cheaper than in neighboring countries and leads to large-scale smuggling.
Until two years ago consumers received a special card, which determined their share of fuel to purchase. It was decided to scrap the rationing and now smuggling to neighboring countries has become a big drain on government resources.
The parliament budget reconciliation committee is now working on next year’s budget, which begins on March 21, but Bijan Zanganeh said on Wednesday none of the rationing proposals in parliament has majority support.
He also emphasized that any price increase will be small enough for consumers to afford it.