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Iran Parliament Refuses To Raise Gasoline Price To Help Revenues

A man using his fuel card in a gas station in Tehran, on July 10, 2018. File photo
A man using his fuel card in a gas station in Tehran, on July 10, 2018. File photo

In a closed-door session on Monday, May 6, the majority of lawmakers in Iran’s parliament opposed raising fuel prices, putting the cash-strapped Rouhani government in in a tight spot.

"Majles has decided to oppose raising gasoline prices," just for the sake of preventing fuel smuggling Speaker Ali Larijani announced, adding, "Majority of the MPs believe that the only way to reduce the amount of fuel smuggled out of Iran, is rationing the product."

In recent days, there have been conflicting reports of impending fuel rationing or price increases in Iran, where the government heavily subsidizes gasoline and other fossil fuels. Cheap fuel prices leads to large-scale smuggling of gasoline to neighboring countries where prices are much higher.

The state-run monopolized Radio&TV news agency, IRIB, cited Larijani also as saying, "There was a lengthy debate on rationing gasoline and distributing it through special cards or vouchers during Monday’s closed-door parliament session."

Furthermore, Larijani insisted that he personally supported rationing fuel since it is the right decision and the majority of Majles are for it.

"Offering the product to consumers with ‘fuel cards’ is the right thing to do and Parliament backs this decision," Larijani maintained.

Meanwhile, the spokesman for the presiding board of the Iranian Parliament, Behrouz Nemati, said the use of fuel cards (vouchers or coupons) may help prevent the smuggling of fuel."

However, Nemati denied that distributing gasoline cards would mean rationing it.

"In no way, we are going to reimpose rationing system for the distribution of fuel. The sole purpose of issuing the new cards is helping the management of fuel consumption in the country," Nemati asserted.

However, many observers believe that re-distribution of fuel cards could be the first step toward rationing gasoline in the country.

Nevertheless, the state-run Mehr News Agency (MNA) also reported on Monday, "Fuel will not, at least for now, experience a hike in price or rationing; rather, consumers will have to use special cards, known as ‘fuel card,’ to receive the product. Ministry of Petroleum is doing preparations for the measure which is expected to be implemented, soon."

Fuel cards were initiated during the hardliner former President Mahmoud Ahmadinejad in 2009.

With U.S. sanctions drastically reducing Iran’s export revenues, draining government coffers, the issue of more than $40 billion in annual fuel subsidies has been pushed to the foreground.

In recent months, President Hassan Rouhani and his cabinet have repeatedly insisted that fuel prices should increase to help the budget deficit. But it is not easy to put an additional burden on the people who are already feeling tremendous pressure because of Iran’s ongoing economic crisis

Predicting popular anger, the parliament has been reluctant to endorse a fuel price rise, but large-scale smuggling is real problem, threatening Iran’s self-sufficiency in gasoline refining.

Amid heated debates, the Islamic Revolution Guards Corps (IRGC)-run news agency (Tasnim) reported last Wednesday that gasoline would be rationed the following day.

Hours after the report was published, long queues were formed at gas stations across Iran, prompting government officials to scramble to convince the public that no decision has yet been made to ration gasoline or raise the price.