Iran plans to hike domestic gas prices to encourage consumers to conserve and to help to free up supplies for export, officials said on Saturday.
“The decision is to be announced this summer or just after,” a senior government official said.
He was speaking at the third annual Ravand Institute conference, which brings together political and economic leaders and experts from Iran and abroad, and whose proceedings may only be reported under the cloak of anonymity.
PHOTO: AFP
Natural gas sells for only US$0.02 per cubic meter in Iran, compared with US$0.30 in neighboring countries, and the difference represents a subsidy of around US$40 billion a year, the official said.
The plan will be to raise the price to US$0.15 per cubic meter for industrial customers, the official said, but he did not provide a figure for individual customers.
Ironically, while Iran has the world’s second-largest reserves of natural gas, the country is a net importer because of a highly inefficient use of it in industry and profligate use on the part of private consumers.
An official from Iran’s gas sector said the country needed to economize to export, and that it is consuming too much.
But an executive from an Iranian gas company said it was ironic that with such high reserves, Iran “could not heat its houses” and forecast that “gas shortages are going to be with us for a long time.”
The senior government official said the “peak of consumption went above 500 million cubic meters a day last winter but our production did not reach that level.”
In January, Iran announced record production of only 460 million cubic meters a day.
The country has a 20-year plan aiming to hike production to 1.45 billion cubic meters a day, with 642 million earmarked for domestic consumption, 259 million for injection in oil production wells and 550 million for export.
But these projects need massive investment, hampered by a US economic boycott.
SRI LANKA
Sri Lanka raised fuel prices and Bangladesh said it planned a hike soon, the latest Asian nations to find they can no longer afford to shield consumers from soaring oil prices.
The two poor South Asian countries announced their steps to limit mounting losses at state-owned oil retailers yesterday, just a day after Indonesia raised fuel prices to cap ballooning fuel subsidies.
India, Asia’s third-largest economy and the world’s second most populous nation, is considering such a move.
Sri Lanka raised kerosene, gasoline and diesel prices by between 14 and 47 percent. In Bangladesh, the country’s state-run Bangladesh Petroleum Corp, the sole oil importer and distributor, has proposed fuel price increases of 37 percent to 80 percent.
Governments across Asia have tried to soften the impact of a global surge in food and energy prices on their populations by keeping domestic prices of fuel and food staples below international levels.
But with oil powering to fresh records almost every week, the last one above US$135 a barrel, several nations feel they can no longer fully subsidize consumers or cover soaring losses of state-controlled oil importers and retailers.
The chairman of Sri Lanka’s Ceylon Petroleum Corp said that this weekend’s fuel price increase would allow the company to only halve its losses from 175 million Sri Lanka rupees (US$1.62 million) a day.
“Even after the increase we are still in the negative ... what we have done is we basically brought it to levels that we can manage,” Ashantha de Mell said.
Oil retailer and subsidiary of Indian Oil Lanka, IOC also raised diesel and fuel prices this week.
In Bangladesh, the interim army-backed government is due to decide shortly about the oil company’s proposal.
“We are examining the proposal regarding the extent of the price hike and the decision will be taken at the highest level very soon,” said M. Tamim in charge of energy and mineral resources.
He said that without a price hike, the government would have to dish out about US$1.5 billion to cover its oil company’s losses this fiscal
RUSSIA
Russian motorists protested in several major cities on Saturday at high prices for gasoline in the world’s second largest oil exporter.
They demanded the government cut taxes on car fuel to 40 percent from 70 percent, to bring down the retail price of gasoline to 15 rubles (US$0.636) per liter (US$2.41 per gallon) from 22 rubles now.
State television showed car owners banging on empty fuel canisters and driving through city streets with their emergency lights on and posters displayed in their windscreens — a form of protest that does not require a permit.
Public protests have become relatively rare in Russia after an eight-year-long, oil-fueled economic boom and a drive by authorities to stamp out opposition and establish control over national media.
Vladimir Putin, who took over as prime minister after anointing his ally Dmitry Medvedev to succeed him as Russia’s president, enjoys high popularity ratings despite galloping inflation, which threatens to exceed 15 percent this month.
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