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Iranian Majlis votes to suspend subsidy reform plan

Iran Materials 8 October 2012 02:18 (UTC +04:00)

The Iranian Majlis has approved a single-urgency bill that suspends the implementation of the second phase of the subsidy reform plan, Mehr news reported.

Of the 242 MPs present for the parliament session on Sunday, 179 voted in favor of halting the second phase of the subsidy reform plan, ISNA reported. However, the bill did not state when the decision would take effect.

The implementation of the subsidy reform plan began in December 2010. At the time, President Mahmoud Ahmadinejad called it the "biggest economic plan of the past 50 years."

It allows the government to gradually slash subsidies on fuel, electricity, and certain goods over the course of five years, with low-income families being compensated with direct cash handouts.

On May 5, the Majlis Integration Committee rejected the administration's proposal to increase revenues from subsidy cuts, a move which could have effectively blocked the implementation of the second stage of the subsidy reform plan in the current Iranian calendar year, which ends on March 20.

The Ahmadinejad administration presented the draft of the national budget bill for Iranian calendar year 1391 to the Majlis on February 1, in which it was proposed that the revenues from subsidy elimination savings would be increased from about $44 billion to $110 billion.

Reportedly, the administration had decided to suddenly free up energy prices to complete the implementation of the subsidy reform plan this year.

But the Majlis said that the administration's decision had run counter to the subsidy reform plan, which calls for the subsidies on fuel, electricity, and certain goods to be cut over the course of five years.

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