Iran News ...


2/22/07

Iran: Majlis committee approves significant increase in petrol prices

By M. A. Saki, Tehran Times Opinion Column

TEHRAN, Feb. 22 (Mehr News Agency) -- The Majlis committee tasked with assessing the national budget voted on Tuesday to increase the petrol price from the current 800 rials per liter to 1500 rials for the next Iranian calendar year, which starts on March 21. The initial approval will later be put to a final vote of the entire parliament.

The committee, which is composed of 23 members of the Budget and Planning Committee and 24 other members selected from 12 other parliamentary committees, was expected to take a more realistic decision about petrol.

The ratification by the committee caused some protests. Some committee members left the meeting in indignation at the price increase. This group favors rationing petrol to control the excessive consumption while the other members argue rationing will create a black market.

However, if one is forced to choose between a 700-rial increase and rationing, it is better to choose the latter, which is the lesser of two evils.

The high petrol subsidy is an open wound in the Iranian economy which needs major surgery. The longer this surgery is postponed, the more economic, health, and social losses will be inflicted on society.

The 700-rial price hike will automatically add to already increasing prices but would still be far below a reasonable figure.

Unfortunately, the petrol price is so low in regard to other commodity prices that even a 90 percent increase would be far below the real market value.

If the Majlis okays the committee's initial approval, it would mean that the problem has not been solved. Even more of the national wealth will then have to be spent to import petrol, air pollution and traffic jams, which have become a headache in big cities, will continue, dilapidated cars will still be plying the country's highways and byways, and petrol trafficking to neighboring countries will continue as usual.

However, since the Majlis doesn't seem to have any plans to sell petrol at the market price or to pay the subsidy directly to all citizens, it is better to vote for rationing. If the Majlis votes for rationing, it should also allow drivers to purchase additional petrol above the rationing limit at the market price.

Unfortunately, the failure to make an expert decision about petrol prices has further complicated the issue.

When the sitting MPs took control of the Majlis, they blocked a plan for annual increases in petrol prices drawn up based on the Five-Year Economic Development Plan. Some parliamentarians even said the decision was something the Majlis should be proud of which would lessen annual price rises. However, inflation not only was not tamed but actually increased.

Now that the committee is studying next year's national budget, it is essential to seek the views of politically unbiased experts outside the Majlis and take their views into consideration when ratifying legislation about important issues, especially the petrol issue.

The heavily subsidized petrol prices and the alarming consumption, at the expense of social justice, must be dealt with immediately.

In light of Iran's social, economic, and political situation, the best solution is to seriously and quickly decide to distribute this subsidy equally among all citizens in order to compensate for the inflation that would arise as a result of freeing up prices and to develop an efficient public transportation system to solve all these confounding problems, such as choking air pollution, congested traffic, and petrol trafficking.

However, we must wait to see what the Majlis decides.

... Payvand News - 2/22/07 ... --



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