Subsidies should be regulated because they hamper the oil industry's development plans, the deputy oil minister said Saturday.
The oil industry currently pays $1.3 billion in subsidies, of which $980 million is allocated to the National Iranian Oil Refining & Distribution Company (NIORDC), and the remainder to the National Iranian Gas Company (NIGC), the official said.
"Subsidy payments have crippled the oil industry's development plans," Mansour Moazami was quoted by Shana news agency as saying.
The oil industry, which has always spearheaded developments in the country, can no longer maintain its position due to the payment of subsides. Furthermore, the amount allocated to the oil ministry is not sufficient to enable the ministry to meet its objectives, he said.
"The budget law provides an excellent opportunity for the oil ministry to make improvement to the transportation, commercial, industrial, and household sectors through revenues derived from conservation," added Moazami. "It also puts us in good stead for any future developments", Moazami noted.
A total of $70 billion worth of projects have been identified so far in accordance with the Note 2 (G) of this year's national budget law. The project proposals have been sent to the Economy Council for evaluation, and will be implemented upon approval.
"We are optimistic about next year's budget law, given the good relations between the parliament and the oil ministry, " asserted Moazami. "This will lead to a noticeable improvement in the economy. "
Note 2 (G) permits the oil ministry to invest as much as $100 billion in the oil industry through its subsidiaries.
Iran's Subsidies Organization receives on average $1.1 billion of the oil ministry's revenues each month, Shana quoted Moazami as saying. "The cash subsidies impose a $392 million deficit in the administration's budget each month," he noted.
