New Budget Proposes 5% Increase in Petroleum Prices

New Budget Proposes  5% Increase in Petroleum Prices
New Budget Proposes  5% Increase in Petroleum Prices

Next year’s draft budget (March 2015 -2016) submitted to parliament on Sunday stipulates that the National Iranian Oil Refining & Distribution Company (NIORDC) should increase the price of petroleum products by five percent.  The increase is intended to help enhance, renew, and develop the distribution network of oil, gas and condensates.  It is also to further develop refineries and storage facilities. The amount will not be considered part of the company’s revenue, and is therefore tax exempt, ISNA reported.

The National Iranian Oil Company (NIOC) will be obliged to deposit 85.5 percent of oil revenues (including gas condensate) into the treasury’s account via the Central Bank of Iran (CBI), who will deposit the amount into certified domestic and overseas accounts.

Two percent of this amount will be allocated for developments of oil-rich yet deprived regions, with 20 percent going to the National Development Fund of Iran (NDFI).  Twenty percent of natural gas revenues should similarly be deposited at the NDFI. A total of 14.5 percent of oil revenues will be held by the NIOC for capital and current expenditures, which also includes payments for buy-back contracts, as well as tanker and insurance costs.  

The budget was prepared with oil price at $72 per barrel (p/b), down from the $100 with which the previous year’s budget was drafted. Price at which export oil is offered at the bourse will be based on the average price traded at primary terminals each month, according to the budget.

Budget allocations for water and electricity projects has increased by 15 percent, said Alireza Daemi, deputy energy minister. The budget also stipulates funding for incomplete power plants, and conversion of dilapidated plants into combined-cycles.