Supplement, Oil & Energy

Fuel rations, price hike hit Iranians amid plunging economy

Published : 16 Nov 2019 07:36 PM | Updated : 05 Sep 2020 01:16 AM

Iranian authorities abruptly raised fuel prices by up to 50% and imposed fuel rationing overnight on Friday, leaving many Iranians angered amid an already plunging economy.

Across the capital, Tehran, long lines of cars waited for hours at pumping stations following the changes in energy policy, which state media announced around midnight without any prior warning to the public.

The decision came following months of speculations about possible rationing. The U.S. withdrew from Tehran's 2015 nuclear deal with world powers last year, and re-imposed crippling trade sanctions that have sent the Iranian economy into free-fall.

Iranian officials say the proceeds from Friday's price hikes are earmarked to fund subsidies for low-income families.

Speaking with The Associated Press at a gas station in downtown Tehran, several people said they were shocked to discover the price rise after going to refuel their cars.

"I hadn't heard the news," 33-year-old Reza said. He was told at the station that the price was now minimum 15,000 rials per liter of gas - 50% up from the day before.

Iranian authorities have allocated a limit of 60 liters per month for every private car at about 13 cents per liter, and beyond that quota, the price jumps to 26 cents per liter, according to state TV's reports.

Previously, drivers were allowed up to 250 liters at 8 cents per liter, or 10,000 rials.

Mohsen Khodaverdian, 43, a civil servant, criticized the government for the price change.

"We are under sanctions, so they want to take the money out of the people's pockets, because they have a budget deficit," Khodaverdian said.

He added that the rise in price for a tank of gas would severely cut into his monthly salary. "It affects everything, I wish it was limited to gas price," he said.

Iran's state TV quoted Vice-President Mohmmad Bagher Nobakht as saying the revenues from the price hike would fund additional subsidies for millions of poorer families.

He said that President Hassan Rouhani had insisted that "all extra revenues from the petrol price reform should be paid back to the people."

Iran's official Taxi Organization also said in a statement that the higher fuel price wouldn't increase cab fares. But Iranian social media was awash with posts from users criticizing the move and saying it would be an added burden amid an already difficult economic situation. Many said they expected the new measures would increase the price of other commodities.

In 2015, Iran ended the rationing of fuel that had been in effect since 2007. According to President Rouhani, the country is now facing its "most difficult" time in decades.