Last Updated: Mon Nov 01, 2010 19:08 pm (KSA) 16:08 pm (GMT)

Rationing begins in Iranian fuel consumption

One million motorist “smart cards” have not yet been delivered
One million motorist “smart cards” have not yet been delivered

One million electronic "smart" cards for motorists in Iran to buy gasoline have not been delivered although, as of Saturday, fuel can no longer be bought without them, an Iranian official said.

The cards have been introduced as part of plans to ration fuel consumption in the No. 2 oil producer in the Organization of the Petroleum Exporting Countries (OPEC). Rationing, initially due to be introduced on May 22, has been postponed.

Despite huge crude reserves, Iran lacks refining capacity and has to import about 40 percent of its gasoline needs which it then heavily subsidies, selling both imported and locally produced gasoline at 1,000 rials (about 11 U.S. cents) a liter.

So although Iran has a daily oil production of 4.2 million barrels, it still spends five to eight billion dollars for petrol imports.

Until Friday, drivers without smart cards could get emergency cards to buy fuel. The cards are being introduced in a bid to prevent a black market in fuel developing once rationing is introduced, although analysts say an illegal market is almost inevitable.

Analysts say subsidies put a big strain on state coffers and encourage waste. The imports are seen as sensitive when world powers are threatening to ratchet up U.N. sanctions on Iran for failing to heed U.N. demands to limit its atomic work.

A spokesman for the smart card project told state radio one million cards in the country of 70 million people had not been delivered. But he said a system was being set up through Iran's post offices for remaining cards to be delivered quickly.

"We shall try to expedite things so that we can distribute the remaining cards," he told Iranian state radio, BBC Monitoring reported.
The spokesman said some undelivered cards, possibly about 60 percent, had been destined for people who no longer needed them or for vehicles no longer on the road. "Therefore, it is not as if we have one million people with no cards," he said.

The government had planned to introduce rationing last month but delayed it in part because of problems in issuing the cards. It raised the gasoline price on May 22 by 25 percent -- still some of the cheapest fuel sold to motorists in the world.

Some officials have said rationing could start later in June but the spokesman gave no details about any start date. "That is a matter for policy-makers," he said.

The government has not said how much fuel would be offered to ordinary drivers with rationing. Some officials have said it would be about 90 liters a month; a figure drivers say is too little. Taxis and other commercial vehicles would get more.

It is also not clear if drivers would be able to top up their rationed allowance with fuel that was not subsidized. The government has been wary of such a step as it tries to rein in inflation, a problem many Iranians complain about.

Further inflation could put a serious dent in the government’s popularity with the next parliamentary elections looming eight months away.
A defeat by Ahmadinejad's Abadgaran (Construction) Party in the parliamentary elections would also affect his own destiny in the 2009 presidential polls.

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