Spending cut: Iran likely to abolish fuel allowances

DUBAI:

Iran is likely to abolish subsidised fuel allowances for motorists, an Oil Ministry adviser said on Saturday, in a move that will cut state spending but could also drive inflation and cause protests.

The government is trying to curb subsidies that have led to profligate energy consumption and put a strain on public finances, already squeezed by international sanctions and last year’s drop in oil prices.

“The issue of fuel rations has not yet been decided, but it is very likely that no ration will be set and private cars from now on will get fuel at market rates,” said an official.

Eligible drivers currently receive 60 litres of petrol a month at a heavy discount to market prices. The introduction of the allowance in 2007 led to rioting among motorists who could previously buy unlimited quantities of cheap fuel.

President Hassan Rouhani, elected in 2013 on a platform of better economic management, has championed efforts to rationalise prices and pushed through a modest increase in fuel prices last year. 

Published in The Express Tribune, May 24^th, 2015.

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