‘Rationing expected to reduce gasoline consumption’

November 16, 2019 - 16:54

TEHRAN - Gasoline consumption in Iran is expected to fall up to 10 percent, considering the recent price increase and implementation of rationing plan, Tasnim news agency reported on Saturday, quoting managing director of National Iranian Oil Products Distribution Company (NIOPDC).

“I predict that we will witness a consumption decline of 8 to 10 percent,” Amir Vakilzadeh said, adding that “Rationing will naturally decrease average gasoline consumption.”

“When the fuel is cheap, carmakers are not inclined to reduce their products’ fuel consumption, because for the buyer fuel consumption won’t be of much importance,” he explained.

According to Vakilzadeh, implementation of the rationing plan would also reduce fuel smuggling profits, and consequently smugglers and dealers are no longer encouraged to traffic fuel.

On Friday, Iranian government started implementing a program for rationing subsidized gasoline and increased fuel prices as it plans to use the revenue for supporting underprivileged families.

Mohammad Baqer Nobakht, head of the Planning and Budget Organization, said on Thursday that proceeds from the price hikes would be used to fund additional subsidies for 18 million underprivileged families, or about 60 million people.

According to a statement published by National Iranian Oil Products Distribution Company, the price for a liter of regular gasoline was increased to 15,000 rials (nearly 35 cents at the official rate of 42,000 rials per dollar) from 10,000 rials and the monthly ration for each passenger car was set at 60 liters. Additional purchases would cost 30,000 rials per liter.

Due to heavy subsidies and devaluation of its currency, Iran has one of the cheapest fuel prices in the world and the country has been fighting rampant fuel smuggling to neighboring countries.

In one of its latest reports dubbed “World Energy Outlook 2018”, the International Energy Agency (IEA) put Iran on top of the list of the world’s countries for energy subsidies. That means Iran holds the first place among the world’s countries in terms of the amount of subsidies which is allocated to energy consumption.

EF/MA

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