Iran News ...


5/10/07

Petrol prices and pseudo-populism

Tehran Times Opinion Column

TEHRAN, May 9 (Mehr News Agency) -- Iran's Oil Ministry is set to begin gasoline rationing on May 22. However, with only 12 days left until the rationing plan is to be implemented, no decision has been made on how many liters each car will be allowed to consume per day or month at the fixed price of 1000 rials per liter.

In the Majlis bill on gasoline rationing, MPs left it to the Ahmadinejad administration to decide the price of gasoline sold outside the rationing system. Even though unofficial reports have put the free market price at about 3000 rials (33 U.S. cents) per liter, some administration officials say the final price is still being debated.

Over the past decade, billions of dollars have been spent subsidizing gasoline.

Thus, it is time to stop wasting so much of the national wealth.

Setting a realistic price or even adopting the international market price would limit gasoline consumption and provide an incentive for the private sector to become involved in the business.

Unprofessional and populist decisions by the Majlis and the administration over the years have brought the country to this point, where gasoline consumption has been increasing at a rate of 10 to 10.5 percent annually over the last eight years. For example, according to the Oil Ministry, only on May 5, petrol consumption reached 84 million liters with 13.9 million liters polluting the Tehran air on that day.

In a recent interview with state TV, Deputy Oil Minister Mohammadreza Nematzadeh said consumption will reach 318 million liters per day in 20 years if prices are kept artificially low.

Over the past few years, whenever anyone has pointed out that the subsidy system would eventually become unmanageable, opponents have resorted to populist arguments, claiming that an increase in gasoline prices would lead to an increase in other commodity prices.

Yet, Iran has experienced skyrocketing inflation over the past two years despite the fixed petrol price.

Meanwhile, some administration officials are still trying to delay the date for the start of rationing, saying more time is needed to adjust the system, although this would only result in more funds being wasted and more pollution.

Just last Tuesday, a double-urgency bill was presented in parliament calling for the rationing bill to be rescinded and the price of gasoline to be set at 1500 rials per liter.

If the government continues to subsidize gasoline sold outside the rationing system, it would be a pseudo-populist act which in the end would hurt citizens and the national economy and only delay the final decision to raise prices.

... Payvand News - 5/10/07 ...

... Payvand News - 5/10/07 ... --



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