Parliament has ratified an amendment whereby the National Iranian Oil Refining and Distribution Company (NIORDC) will acquire 20 percent of diesel prices by way of duties for road maintenance, fuel conservation, and reducing environmental pollution, Tasnim news agency reported.
The new regulation stipulates that 20 percent of diesel prices, with the exception of those consumed by the agricultural sector will be secured by the NIORDC in order to be spent on construction and expansion of rail and roadways, road maintenance, fuel conservation, and reduction of road traffic accidents.
Revenues are to be deposited in a government account, and through annual budget laws will be allocated uniformly.
Price of diesel fuel in Iran has risen dramatically as the government implemented a plan to remove subsidies, estimated to be worth about $100 billion a year, on basic commodities and energy in recent years. Large subsidies were paid on basic commodities and fuel for decades, leading to unsustainable consumption and high budget deficits.
Despite the price increase, fuel remains heavily subsidized. Automotive fuel in Iran is among the cheapest in the world. According to the Global Petrol Prices, Iran ranks fifth in terms of cheap diesel price, offering it at 0.09 per liter. Increasing diesel prices will not only enormously impact transportation costs, but industries such as electricity, agricultural, and housing sectors will also be strongly affected as prices rise.
