Wednesday 22 December 2010

Iran cuts gasoline subsidies but its petrochemical industry is thriving


Iran's Oil Minister Massoud Mir-Kazemi said that Iran produced more than one billion litres of gasoline to meet domestic demands. Addressing the country's lawmakers on Tuesday 21st December, he said that Iran defied expectations of shortages.

“Today, the Oil Ministry's staff are implementing the targeted subsidiary plans … and should any problems arise, we will tackle them within the hour,” said Mir-Kazemi.

“This proposal, which places the most pressure on the Oil Ministry, is being gradually implemented,” explained Mir-Kazemi, referring to President Mahmoud Ahmadinejad's economic reform plans.

Part of the plan is phasing out national subsidies for fuel and food, which Iran began implementing on Sunday 19th December. Speaking about it on national television Ahmadinejad told Iran that the plan would lead to a better and more healthy economy, as domestic energy consumption would decrease making it possible to export the extra reserves.

Mir-Kazemi seconded Ahmadinejad's expectations by saying that higher prices would encourage people to use less fuel and cause less pollution, which is a serious problem in the country's capital Tehran.

Under the new plan, the price of gasoline has risen fourfold from 1,000 rials per liter to 4,000 rials, and fuel beyond a person's quota – which is 50 litres per month – now costs 7,000 rials per litre.

Last week, Mirkazemi said that Iran intends to increase gasoline production capacity by 10 million litres per day. It currently produced 45 litres per day, and is the second biggest crude oil producer in the Middle East.

In other related news, Iran's Deputy Oil Minister for Petrochemical Affairs Abdolhossein Bayat has said that Iran's petrochemical industries exported over 10million tonnes of product in the first 9 months of the current Iranian year [March 21-December 21].

"More than 10mln tons of petrochemical products have been exported since the beginning of the current year, which is 22% higher than the same period in last year," said Bayat said.

He also said the country's petrochemical industry was now worth $6.2 billion, which showed a 47 per cent growth compared with revenues of petrochemical exports last year.

"This year will see a 10.5-mln-ton increase in the production capacity because of a 5.2 billion dollar investment in the petrochemical sector," said Bayat.

Sources: PressTv, Fars News Agency, Upstream

For more news and expert analysis about Iran, please see Iran Strategic Focus.

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