Azerbaijan, Baku, Dec.20 /Trend /
Increasing the energy carrier's prices is a positive but delayed step to improve the Iranian economy and this plan should have been implemented before the Iranian economy came into force, Iranian Competition Council Chairman Jamshid Pazhoyan was quoted by TREND News Agency as saying.
Jamshid Pazhoyan said that Iranian President Mahmoud Ahmadinejad has announced about launching his economic reform plan aimed at overhauling the country's economy by shelving energy and food subsidies.
President Ahmadinejad said on Saturday that the major plan will start on Sunday and that all subsidies would be gradually removed during a five-year period.
Before the official announcement of the plan, every family member received a sum of 810,000 rials ($80) for two months.
The Iranian chief executive also asked Iranians not to hurry in withdrawing the funds from their bank accounts.
He also vowed that the Iranian government would tackle economic problems such as housing, unemployment and the banking system by implementing the plan.
Under the new rationing system, the price of gasoline will rise four-fold from 1,000 rials (10 cents) per liter to 4,000 rials (40 cents) per liter as of Sunday. Fuel beyond a person's quota -- which is 50 liters per month -- is now sold at 7,000 rials (70 cents) per liter, up from 40 cents.
The Iranian government also said in an announcement that it will also cut subsidies of diesel, kerosene, natural gas and electricity as of Sunday.
The government plans to gradually cut energy subsidies over the space of five years and has promised instead to compensate low income families with direct cash handouts.
Supporters of the plan say it is in line with global financial organizations' recommendations that Iran get rid of a heavily subsidized economy if it wants to solve its economic problems. But, some analysts have criticized the plan, saying it could trigger a hike in prices and stoke up Iran has fixed new electricity, water and gas prices within the governmental plan to reduce the subsidies.
Electricity tariffs were raised from 1.6 cents up to 4.5 cents per 1 kWh, water tariffs from 8 cents up to 28 cents per 1 cubic meter, gas tariffs from 1, 3 cents up to 7.0 cents per cubic meter from December 19.
It was reported that the petrol prices were raised four times due to reducing the governmental subsidies for the population.
Now the petrol price will hit about 4,000 riyals per liter.
However, the authorities try to soften the effect of abolishing the subsidies.
"We have taken additional actions, in particular, the petrol price (up to 50 liters per month) will still be subsidized for the first month," President Ahmadinejad said.
Moreover, direct payments to poor families will be made from Sunday.
The president said that the governmental plan on reducing the subsidies will give impetus to the economic growth in the country.
Introducing the wide-ranging cuts, Iranian president Mahmoud Ahmadinejad said on Saturday that the reductions in essential subsidies were the "biggest surgery" to the nation's economy in half a century. He said poor people would enjoy a life with higher standards after the cuts and the saved money would result in a flourishing economy for Iran.