Call for Liberalizing Gasoline Prices

Call for Liberalizing Gasoline PricesCall for Liberalizing Gasoline Prices

Gasoline prices should be liberalized to optimize fuel consumption, managing director of the Iranian Fuel Conservation Company (IFCO) told ILNA.

Gasoline could be the first energy carrier to realize the objectives of subsidy reform plan, as it affects household expenditure to a smaller degree, Nosratollah Seifi said Saturday.

Putting an end to gasoline subsidies will optimize fuel consumption, the official said, adding that a managed float pricing regime would make people responsible for consumption management.

Cutting gasoline subsidies is part of the subsidy reform plan, pertaining to upstream policies. But since it is not entirely incorporated in the fuel conservation plans, the IFCO can only put forward suggestions, without being able to exercise governance.  

Prices have increased to 30 cents (10,000 rials) per liter recently, which is close to the Persian Gulf FOB prices of 38-44 cents (13,000-14,000 rials) per liter. "So our suggestion is to liberate gasoline prices now," Seif said. The objectives of the subsidy reform plan are required to be implemented by March 22, he noted.

Cheap energy prices led to a rapid increase in domestic energy consumption. As a result, Iran became one of the most energy-intensive economies in the world.

Iran significantly reduced energy subsidies in December 2010 as part of a five-year program to gradually increase prices of oil products, natural gas and electricity to full cost prices.

In January 2013, the government ended supplies of subsidized gasoline for cars with engines of 1,800 cubic meters and above, and restricted sales of subsidized gasoline near border areas.