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Oil-rich Iran hikes petrol prices by 25 percent

TEHRAN (AFP) – Oil-rich Iran on Tuesday increased the price of petrol by 25 percent despite announcements by the government only the day before that prices would remain the same for the moment.

Surprised drivers in Tehran found that pump prices had been hiked overnight to 1,000 rials (10 cents) from 800 rials a litre (eight cents), in the first move in a major plan to reduce the colossal state subsidies on petrol.

The plan takes a two-pronged approach to budget burden of Iran’s frenzied petrol consumption by raising the price of petrol — less than a comparable amount of mineral water — and imposing a rationing system.

The rationing system, whereby consumers will have to pay a higher price for any petrol they consume above a certain quota, was to have been implemented on Tuesday but has been postponed.

The government’s press office announced the delay on Monday, saying there were insufficient cards to ration the petrol have been delivered to consumers. Confusingly, it also said there would be no change in pump prices.

The price rises as of midnight (2030 GMT) were announced late Monday in a joint statement by the oil and interior ministries which also said that the price of "super" petrol has been hiked to 1,400 rials (15 cents).
Oil Minister Kazem Vaziri Hamaneh said the details of the rationing plan would now be announced on June 7, according to the ISNA news agency. It is still not clear how high the quota will be or what will be the cost of petrol bought in excess of the rationing limit.

The lavish consumption by Iranian drivers forces the OPEC oil cartel’s number two producer to import billions of dollars of extra petrol annually. The sum reached more than four billion dollars in the last Iranian year.

There is a consensus in Iran that this burden on the budget cannot continue but the government is also aware that Iranians have become very used over the years to unlimited cheap petrol.