TEHRAN: Iran levied up to a five-fold hike in fuel prices from Sunday as the government started scrapping subsidies as part of a long-awaited economic overhaul, despite initial resistance by conservatives.
The move comes after much debate in parliament which had criticized the scheme at a time when Iran’s economy is reeling under inflation, high unemployment and sanctions. But on Sunday lawmakers welcomed the plan.
Security forces were deployed across main squares and fuel stations in Tehran to prevent any violence as the regime came into force.
Motorists were hardest hit by the policy change, which sent gasoline prices soaring to 4,000 rials (40 US cents) from 1,000 rials per liter for the 60 liters they receive as a monthly quota, state television reported. They now have to pay 7,000 rials per liter for any extra gas they require.
ILNA news agency, citing the Economy Ministry, said the monthly hike in household cooking gas charges was more than five fold, electricity nearly three fold, and water more than three times.
Tehran municipality said the rises would not lead to fare hikes of metro rail network and city-run buses in the capital, but taxis would review their tariffs.
The government plans to phase out over a five-year period subsidies on energy and food including water and bread as part of the reforms which had been in the pipeline for several years.
Subsidies on these products cost the state’s coffers about $100 billion a year, according to official estimates.
To offset the rising prices, the government has begun to pay part of the expected savings from subsidy removals in the form of direct aid to the people.
According to official figures, some 60.5 million Iranians have already started to receive 890,000 rials (around $78) paid into bank accounts every two months.
This represents $2.5 billion a month in the state budget.
A 2007 attempt by government to ration gasoline triggered riots in Tehran, and, Sunday, police guarded several fuel stations in the capital to prevent any repeat of the violence.
“So far no untoward incident has been reported since the implementation of the plan,” Tehran police chief Hossein Sajedinia told Mehr news agency.
On Sunday, Ahmadinejad thanked citizens for “cooperating” in the initiative.
“I believe the Iranian nation... will move forward till the last stages of this great economic plan,” state television quoted him as saying. The president had announced the hikes Saturday night.
– Agence France-Presse