Iran on Saturday started implementing a higher gasoline price under a new three-tier system, raising costs for non-card refueling or quota overuse in a cautious move to rein in subsidies while avoiding unrest.
The gas price has now risen to 50,000 rials (about 4 cents) per liter for those who refuel without using smart fuel cards or after exhausting their subsidized quotas.
Long queues were formed at gas stations hours before the rise took effect, videos obtained by Iran International show.
Iran’s cabinet approved the new three-tier fuel pricing system last month. The initiative, dated November 23, says that the two existing subsidized rates — 15,000 rials (1.2 cents) for monthly quotas and 30,000 rials (2.4 cents) for non-quota purchases with personal smart fuel cards — will remain in place but with reduced allocations.
An across-the-board fuel price rise in November 2019 triggered nationwide protests that were quashed with deadly force, with hundreds reported killed and thousands detained.
The increased rate was kept and maintained unchanged until the latest initiative.
The new rate of 50,000 rials represents about ten percent of the government’s refinery purchase cost, the directive said.
In late October, President Masoud Pezeshkian said there was “no doubt” that fuel prices would eventually need to rise as domestic consumption continues to climb.
Fuel demand has at times exceeded 140 million liters per day, outpacing production of roughly 110 million liters, driven by inefficient vehicles, smuggling and seasonal spikes, according to officials.
Under the new measures, government-plated vehicles, cars in free-trade and special economic zones, imported cars and newly registered domestic vehicles will no longer receive 15,000 or 30,000-rial quotas.
Instead, they will be allocated a monthly amount priced entirely at the new 50,000-rial tier. Private individuals owning more than one gasoline-powered car will be entitled to quota rates for only one vehicle.
Alongside the new pricing policy, the first cargo of imported super gasoline — 300,000 liters — was sold on Iran’s energy exchange on November 22 at 658,000 rials (57 cents) per liter.
Tasnim news agency reported that further changes, including adjustments to gas quotas for CNG-powered taxis, are expected to be announced in February.
