Iran to ration gasoline, drivers race to the pumps

By Edmund Blair, The Star online, 27/06/2007

TEHRAN (Reuters) - Iran said it would introduce gasoline rationing on Wednesday to wean the No. 2 OPEC crude producer off costly fuel imports but the move sparked angry scenes in the capital where one fuel station was set alight.

Despite its huge energy reserves, Iran lacks refining capacity and must import about 40 percent of its gasoline, a sensitive issue when world powers have threatened fresh U.N. sanctions in a row with Tehran over its nuclear programme.

Flames rose from a fuel station in Pounak, a poorer area of Tehran, set alight in angry scenes after drivers rushed to get fuel before a midnight deadline for rationing, witnesses said.
"Guns, fireworks, tanks, (President Mahmoud) Ahmadinejad should be killed," angry youths chanted as they hurled stones, one witness at the scene said. Another witness said riot police were in the area trying to disperse the crowd.

Cars stretched along main streets and down side alleys at other gasoline stations throughout the capital after months of uncertainty about when or if rationing would be implemented.
Even before rationing started, there were reports of scuffles at fuel stations as frustrated drivers stocked up.

"From midnight tonight, gasoline will be rationed," state television said late on Tuesday, quoting an Oil Ministry statement.

Some queuing drivers -- long used to cheap, abundant fuel -- grumbled about the government of Ahmadinejad, who vowed to share out Iran's oil wealth more fairly but whose policies, critics say, have stoked inflation.

Imports are a big burden on state coffers because all fuel, whether imported or domestically produced, is sold at heavily subsidised prices. Even after this year's 25 percent price hike, fuel still sells at just 1,000 rials (11 U.S. cents) a litre, some of the cheapest in the world.

Oil traders said before the news they saw no sign Iran would cut imports even if rationing went ahead. Iran consumes 75 million or more litres a day, a figure that has been rising at 10 percent a year, pushing up import needs.

'SMART' CARDS
Private cars will get 100 litres of gasoline a month but less if they also burn compressed natural gas, state TV said. Drivers have complained that the amount is too little. For the time being, private drivers would be able to buy their daily allocation up to four months in advance, it said, adding that this period could later be extended to six months.

Parliament and government had debated whether any rationing plan would allow drivers to buy extra fuel at market prices. Tuesday's announcement made no mention of that.

Oil Minister Kazem Vaziri-Hamaneh urged Iranians not to worry about the impact of rationing.
"When you have gasoline for four to six months, its management is in your hands and you have the choice not to consume it," he said on a television discussion programme.

Official taxis, which only consume gasoline, will get 800 litres per month, while other drivers who work as part-time taxis will get 600 litres per month, state TV said. Government cars will get 300 litres per month.

All gasoline is already sold using electronic "smart" cards, but some drivers have not received them. Officials say the cards will reduce the possibility of a black market in fuel but analysts say such a trade is almost inevitable.

Heavy subsidies in Iran have encouraged waste and smuggling to neighbours that do not have such cheap fuel prices.

This year's budget to March 2008 allocated $2.5 billion for gasoline imports but officials had said Iran would spend that amount by August. The government spent $5 billion last year, double what it planned, and had to ask parliament for more cash.

The United States, which is leading efforts to isolate Iran over its nuclear plans, has said Iran's gasoline imports are a point of "leverage." Washington accuses Iran of seeking to build nuclear weapons, a charge Tehran denies.