Growth of gasoline smuggling in Iran brings government subsidies for energy sources into question

Growth of gasoline smuggling in Iran brings government subsidies for energy sources into question

Azerbaijan, Baku. Jan. 7 / Dalga Khatinoglu, Trend Iran News Service chief /

The growth of gasoline and diesel fuel smuggling in Iran has led to discussions related to another increase in energy prices in the country.

Iran's parliament imposed a ban on the implementation of the second phase of the plan to abolish state subsidies for energy sources. The first phase of the plan to abolish the subsidies was carried out in December of 2010. Some 450,000 rials ($15 at market rate) are transferred each month to the bank account of each person as compensation under this phase.

Currently, 1,000 cubic meters of gas cost 700,000 Rials in Iran, while a liter of gasoline sold by quota - three thousand rials, a liter of gasoline sold without a quota - seven thousand rials, a liter of diesel fuel sold by quota of 1500 rials, a liter of diesel sold without a quota is 3,500 rials.

The market rate of dollar in Iran today stands at over 30,000 Rials.

Thus, the price for gas, gasoline and diesel fuel on the free market in Iran, are respectively 18.73, 11.5 and 20.6 times lower than in neighboring Turkey. Low energy prices contribute to the growth of petrol and diesel smuggling.

According to official statistics, in 2009, prior to the first phase on removal of subsidies, 10 million liters of gasoline and diesel were smuggled per day from Iran. In 2011, this figure fell to three million liters per day.

The decline of Iranian rial by 40 percent compared to the dollar over the last four months increased the difference in energy prices, both within and outside the country.

"Smuggling of energy sources through various ways and means has intensified, thus, there is a need to raise the price of diesel fuel and gasoline," Iran's Deputy Oil Minister Ali-Reza Zeighami told today the Iranian news agency MEHR

On November 25, 2012, Zeygami said that six million liters of diesel and two million liters of petrol are smuggled from Iran on daily basis.

Iranian parliament forbade raising prices for gasoline and diesel fuel until the next Iranian calendar year (which begins March 20, 2014).

To bring the price of gasoline and diesel to the level of 2011, prices should be raised by at least 40 percent, as much as the course of rial has dropped.

According to official statistics, currently, the inflation rate in the country is 26 percent. Even according to statistics issued by the International Financial Institution in December, the inflation rate in Iran is at 50 percent. Hence, the increase in energy prices will further enhance the level of inflation, resulting in creation of a big problem, mainly for the industrial sector.

Due to sanctions, the industrial sector of the country is in bad condition. According to the International Monetary Fund, in 2012, Iran's economic development was -0.9 percent. The International Institute of Finance suggests that in 2012, the Iranian economy fell by 3.5 percent.

On the other hand, the difference in prices for energy resources within and outside the country is so large that even a price rise of 40 percent is unlikely to have a significant effect on the reduction of smuggling.

Thus, the question of whether to implement the second phase of the removal of subsidies or not will probably for a very long time remain the subject of disputes between parliament and the government.

Geostat reveals volume of meat production in Georgia
Geostat reveals volume of meat production in Georgia
Georgia reports 234 coronavirus cases, 349 recoveries, 9 deaths
Georgia reports 234 coronavirus cases, 349 recoveries, 9 deaths
Health Minister: Only WHO approved vaccine to be imported
Health Minister: Only WHO approved vaccine to be imported
Loading Bars
Latest
UK reports 82 new COVID-19 deaths
White House cites 'active threat,' urges action despite Microsoft patch
Iran's South Pars Gas Company declares gas production volumes
4 terrorists killed in security forces operations in NW Pakistan
Turkey registers more than 11 180 new coronavirus cases
Iran’s CBI unveils amount of loans issued by banks
Azerbaijani Finance Ministry to auction off interest-bearing bonds
Iran to launch several facilities under city municipalities
Azerbaijan together with McKinsey improving railway sector
Turkmenistan's State Development Bank opens tender for IFRS 9 standard implementation
FIA updates schedule of Formula 1 weekends
Amount of loans issued in Iran's industrial and mining sectors announced
Israel's forex reserves hit record 185.09 bln USD
Review of main events of Azerbaijani financial market for first week of March
Turkey goes zero waste in agriculture
Iran's Energy Exchange announces products to be on sale on March 8
Iran’s Bahar Azadi gold coin price rebounds
Uzbekistan takes additional measures to support livestock industries
Iran’s CBI shares report on open market operations
Geostat reveals volume of meat production in Georgia
Reopening schools a "national effort" to beat coronavirus: UK PM
Jordan's PM reshuffles cabinet to accelerate reforms
Turkmenistan's oil refining volumes exceed plan
Kazakhstan increases imports from Hungary in 2020
Iran's interbank interest rate decrease
Weekly review of Azerbaijani currency market
Indonesia reports 5,826 new COVID-19 cases, 112 more deaths
7 killed, 3 missing in floods in northern Algeria
Iran reveals COVID-19 data for March 7
Azerbaijan shows footage from Aghdam's Suma village (VIDEO)
COVID cases up in Turkey’s 3 biggest cities as east enjoys calm
Turkmenistan reveals indicators of construction, industrial sector
Iran launches new projects in Hormozgan Province
Azerbaijan's Mortgage & Credit Guarantee Fund signs tender contract
Russia’s confirmed coronavirus cases grow by 10,595 in past day to 4,322,776
Azerbaijan confirms 127 more COVID-19 recoveries
Bitcoin rises 4.2% to $50,947.94
Georgia reports 234 coronavirus cases, 349 recoveries, 9 deaths
Uzbekneftegaz stabilizes pressure at gas pipelines of Mubarek oil & gas dep’t
Prices on Azerbaijani oil continue to rise
Khazar Consortium opens tender for purchase of steam field unit
Iran to manufacture new wagons and locomotives
Saudi-led coalition destroys 10 Houthi drones
Document on providing all countries with vaccine against COVID-19 adopted under Azerbaijan’s chairmanship in NAM
8 police, 5 militants killed during clashes in N. Afghanistan
Weekly review of Azerbaijani precious metals market
Iran's Energy Exchange announces products to be on sale on March 7
Azerbaijan shows footage from Fuzuli's Garakollu village (VIDEO)
Weekly review of major developments in Azerbaijan's transport sector
S. Korea reports 416 more COVID-19 cases, 92,471 in total
Health Minister: Only WHO approved vaccine to be imported
Turkey records dropping revenues from cement export to Georgia
Iran's customs releases more imported commodities
Turkmenistan shares data on GDP growth rate
New hazelnut processing plant to open in Azerbaijan’s Zagatala
New Zealand's Auckland emerges from lockdown, Australia starts AstraZeneca vaccinations
China exports jump 60.6% y/y in January-February, imports up 22.2%
Brazil registers 1,555 deaths from COVID-19 in 24 hours
Iran's trade, economic, political relations with neighboring countries to be developed
Ebola infects 29 people, kills 13 in Guinea, DRC: Africa CDC
UN chief condemns terrorist attack in Somalia
Paraguay’s president asks all ministers to resign amid protest rallies
Weekly review of highlights in Azerbaijan's agricultural sector
Israel reports 3,262 new COVID-19 cases, 799,727 in total
Biden says $1,400 payments can start to go out this month
France registers 23,306 new coronavirus cases, 170 deaths
U.S. Senate passes 1.9-trln-USD relief bill after marathon overnight session
UK records another 6,040 coronavirus cases, 158 deaths
India could be next happening market for SPAC-driven investor frenzy
Amazon, Google vie for piece of India digital payment market
India’s Wipro to acquire UK company for $1.45 bn
Indian-American named 1st VP, COO of Federal Reserve Bank of New York
Indian Govt to support Sri Lanka – Keheliya
Canada thanks India for sending 500,000 doses of COVID-19 vaccines
India proposes inclusion of Chabahar Port in INSTC multi-lateral corridor project
Nepali Parliamentarians take COVID-19 vaccine ahead of reinstated lower house meeting
Twitter tests audio chat tool Spaces on Android in India
WHO reports over 353,000 new daily cases of COVID-19
U.S. administers 87.9 million doses of COVID-19 vaccines: CDC
Foreign diplomats acquainted with Gulebird HPP in liberated Lachin of Azerbaijan (PHOTO)
Uzbekneftegaz eyes increasing daily production of liquefied gas at Shurtan oil&gas dep’t
Maduro receives Russia’s Sputnik V COVID-19 vaccine
Prices for fuels and lubricants increase in Kyrgyzstan 10-15% in one month
Turkey reports 11,770 COVID-19 cases in 24 hours
Iran, Iraq confer on expansion of transportation coop.
Visitors from Central Asia countries to enter Georgia with PCR tests
Armenian occupants seriously damage Azerbaijan's ecology - Ministry (PHOTO)
Paris police clear Seine riverside over lack of social distancing
Twitter's Dorsey auctions first ever tweet as digital memorabilia
Tibetan spiritual leader Dalai Lama gets vaccine shot
Five people killed in Ukrainian bus crash in Poland
Azerbaijani oil & gas sector's weekly review
Air France plane forced to land in Sofia due to disruptive passenger
Turkmenhimiya SC opens tender for construction of plants for technical iodine production
Georgian GlenBerries company launches arrangement of greenhouses for growing vegetables and fruits
Azerbaijani Ministry of Education implementing innovative projects with Microsoft
Bahar Azadi gold coin price continues to fall in Iran
We successfully completed all steps taken, including ending occupation of Nagorno-Karabakh - Erdogan
WHO official advises against introducing ‘immunity passports’ for travelers now
Russia logs 11,022 new COVID-19 cases
All news