Iran Removes Parts of Subsidies Given to Diesel Consumers

The Iranian government has decided to remove a major part of the subsidies allocated to diesel fuel amid efforts to control rampant fuel smuggling that has affected the domestic supply.

A decree issued by Iran’s Cabinet on Sunday said that truck drivers and other diesel fuel consumers would have to pay unsubsidized prices if their monthly quotas expired.

The decree did not include exact prices and the date on which the new pricing system will be introduced. However, it indicated that diesel fuel will be available at gas stations across Iran at three prices.

The prices include a heavily subsidized price for motorists and truckers using the fuel for inner-city transportation based on their monthly quotas and credits, a half-subsidized price for heavy vehicles transporting cargo and passengers between cities based on their registered documents, and an unsubsidized price for other users.

Iran has the cheapest fuel prices in the world, with a two-tier pricing system for diesel that does not currently exceed IRR 6,000 (0.73 cent) per liter.

The ultra-cheap prices have encouraged mass smuggling of fuel across the borders, with some reports suggesting that a country like Pakistan relies on fuel smuggled from Iran for nearly 30% of its local demand.

Official reports from the government and parliament in Iran suggest that some 25-30 million liters of fuel, including gasoline and diesel, are being smuggled from the country every day.

The same reports show that the Iranian government will have to spend some US$10 billion on fuel imports in the calendar year to late March to respond to domestic demand for gasoline and diesel. - Press TV