Energy Subsidy Cut Still Unlikely

March 2007 | Economic Analysis

We remain skeptical toward the possibility of gasoline subsidy cuts in Iran, following the move by the majlis (parliament) to approve rationing plans. At a cost of IRR800 (US$0.09), heavily subsidised gasoline in Iran is among the cheapest in the world, a fact which has led to rapid rise in consumption as a result of smuggling across the border and inefficient domestic usage. As a result Iran currently imports around 40% of its gasoline needs - estimated at around 70mn litres a day - due to limited refining capacity and static production levels. According to the recent decision meant to

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