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Ahmadinejad orders implementation of subsidy reform plan


Source: Mehr News Agency, Tehran

On Sunday, President Mahmoud Ahmadinejad officially ordered the implementation of the subsidy reform plan. In an open session on January 5 the Majlis overwhelmingly ratified the subsidy reform plan and later on January 13 the Guardian Council endorsed the approval.

It is not clear how the public will react to the elimination of subsidies and rising prices. A number of gas stations were torched in 2007 when gasoline prices rose 25 percent.
Iran Moves To Cut Popular Economic Subsidies Despite Political Risk

The goal of the subsidy reform plan is to bring prices to their true market level within a five-year period. The plan mainly targets energy prices.

According to the plan, the administration is obligated to reform the energy prices by the end of the fifth development plan (2010-2015).

The plan calls for prices of oil derivatives not to be less than 90% of the prices in the Persian Gulf market.

The plan also seeks to bring the average selling price of electricity and natural gas for domestic consumption to match their production costs, although the plan will allow the administration to set the preferable prices according to the geographical location, time, place and type of consumption.

The price of water, likewise, will also be set to match its final cost. The plan also calls on the administration to take into account the transference and distribution costs as well as the geographical location, time, place, type and level of consumption.

The plan also requires the administration to reform subsidies on wheat, rice, cooking oil, sugar and milk, air, and postal services.

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