Q&A-What does subsidy bill mean for Iran?

TEHRAN, Nov 9 (Reuters) - The political stakes are high for the plan of Iran's President Mahmoud Ahmadinejad to cut food and energy subsidies.

Locked in dispute with Western powers over Iran's nuclear programme, the populist president has faced an unprecedented wave of protests by supporters of moderate defeated candidates claiming June's presidential election was forged.

The liberal reforms could stoke popular dissent, coming at a time of spending cutbacks because of the fall in world oil prices over the past year. Or they could put the economy and government in better shape to withstand more sanctions in the nuclear dispute. Iran is one of the world's top five oil producers.

Here are key facts in the subsidy debate:

WHAT IS THE HISTORICAL BACKGROUND TO THE PLAN?

Overhauling Iran's generous subsidy system has been under discussion for years, but stiff popular and political resistance has repeatedly stalled attempts at reform.

Gasoline rationing was introduced in 2007 as the first step towards reforming the system. Though it provoked riots in Tehran, the plan went ahead.

The current bill, which takes the plan forward, was presented to parliament in early 2009, before the presidential elections in June that provoked protests by supporters of defeated opposition candidates who claimed vote fraud won Ahmadinejad the poll.

The bill was approved in October but Ahmadinejad fought off an attempt to impose close scrutiny over what his government does with the money. Parliament obliged the government to count the subsidy savings as part of the official budget that requires the assembly's approval but on Saturday pulled back from a threat to demand special accounts are set up directing the money into specific areas of the economy approved by parliament.