Cash subsidies weakens Iran’s oil industry
Baku, Azerbaijan, Jan. 17
By Umid Niayesh - Trend:
Iran's oil ministry pays over 37 trillion rials (about 1.2 billion) per month for Iran's Subsidies Organization, Iranian deputy oil minister for planning affairs, Mansour Moazzami said, the oil ministry's SHANA news agency reported Jan. 17.
National Iranian Oil Refining and Distribution Company's share of the funding for the subsidy reform plan stands at 3 trillion rials, meanwhile the National Iranian Gas Company pays 7.5 trillion rials of its revenues for cash subsidies per month, Moazzami said.
He said that the issue is seriously weakening the country's oil industry, adding many projects in oil industry are facing lack of financial resources.
Iran currently spends some $80 billion each year on fuel subsidies, according to the country Oil Minister Bijan Namdar Zanganeh.
Last April Iran's president, Hassan Rouhani announced that the government spends about $1.4 billion (based on then official rate of 25,500 rials per each USD) per month on the cash subsidies for citizens.
The cash subsidies impose about $392 million deficit in the budget per month for administration, he noted.
The administration of former president Mahmoud Ahmadinejad implemented the first stage of the subsidy reform plan toward the end of 2010.
The subsidy reform plan is aimed at easing pressure on state finances by cutting tens of billions of dollars from government subsidies on food and fuel. The government pays cash to citizens as compensation for increased prices by cutting subsides.
The government pays 45,500 rials to citizens to compensate for a partial cut of subsidies.
It is estimated that the government will acquire 480 trillion rials in the current Iranian fiscal year (March 2014-March 2015) in revenues through the implementation of the second phase of the economic reform plan.
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