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Iran MPs reject plan to hike gas oil price

A lawmaker also said a separate plan to ration gasoline and raise its price may be delayed from a scheduled May 22 start.

Iran is the world’s fourth-largest oil exporter, but a lack of refining capacity forces it to import 40 percent of its gasoline needs.

Oil and gas products are sold well below world market prices, encouraging consumption as well as draining state coffers, but raising them is politically sensitive as the country struggles with high inflation and unemployment.

The parliamentary vote was 110 in favour to 65 opposed to the removal of a proposal in the 2007-2008 budget to increase the gas oil price to 450 rials (less than 5 US cents) per litre from 160, the IRNA news agency said. The Iranian year started on March 21.

Cheap, abundant fuel is considered a right by many Iranians, but the cost has become an increasing burden for the government.

Domestic consumption of gasoline has increased by 10 percent per year over the past five years, while total energy subsidies reached 17.5 percent of gross domestic product in 2005-2006, according to the International Monetary Fund.

Parliament in March backed a plan to raise prices and ration gasoline to restrain consumption, but a senior MP said its implementation may be delayed, citing problems with smart cards introduced to manage the new system.

“Because of problems in distributing smart cards ... gasoline rationing will not take place (as planned from May 22),” Kamal Daneshyar, head of parliament’s energy commission, told the Mehr News Agency.

But Deputy Oil Minister Mohammadreza Namatzadeh said no decision had yet been taken to delay rationing.

Iran’s gasoline plans are scrutinised by energy traders, who send a gasoline tanker to Iranian quaysides every two days.

Gasoline imports cost about $5 billion in the past year, but Iran’s energy exports are expected to earn over $50 billion in 2007.

World powers have imposed U.N. sanctions on Iran because of its refusal to rein in its nuclear activities. But Western diplomats say fuel imports are unlikely to be targeted, because it would hurt the public, not the government.

The West accuses Iran of seeking to build atomic bombs under cover of a civilian nuclear programme, a charge Teheran denies.