DUBAI (Reuters) - Iran introduced gasoline rationing and price hikes of at least 50 percent on Friday, drawing sporadic protests and widespread worries over rising inflation despite official promises that the revenue would be used to help needy families.
Iran, which has some of the world’s cheapest fuel prices due to heavy subsidies and the fall of its currency, has been fighting rampant fuel smuggling to neighboring countries.
State television said the price of a liter of regular gasoline was increased to 15,000 rials (12.7 U.S. cents) from 10,000 rials and the monthly ration for each private car was set at 60 litres. Additional purchases would cost 30,000 rials per liter.
Hundreds of people protested against the price hikes in areas including the northeastern city of Mashhad, in the southeastern province of Kerman and the oil rich province of Khuzestan, the semi-official news agency Fars reported.
A video posted on social media showed protesters in Khuzestan’s capital, Ahvaz, urging drivers to block traffic, by chanting: “Honourable Ahvazis, turn off your engines!”
“Riot police are out in force and blocking main streets. I heard shooting about an hour ago,” a resident in Ahvaz, who declined to be named, told Reuters by telephone.
Social media videos of protests in other cities could not be verified by Reuters.
In 2007, angry Iranians torched pump stations and hurled abuse at then President Mahmoud Ahmadinejad’s government for imposing fuel rationing.
In a Friday prayer’s sermon in Tehran, senior cleric Ayatollah Mohammad Emami Kashani said authorities should set tougher price controls to prevent an inflationary spiral after the gasoline price increases.
“There should be supervision, so that someone selling fruit or other goods can be asked why more expensive gasoline should lead to more expensive fruit or goods,” Emami Kashani said in remarks carried by state TV.
Mohammad Bagher Nobakht, head of the country’s Plan and Budget Organization, earlier told state TV that proceeds from the price hikes would be used to fund additional subsidies for 18 million families, or about 60 million people.
Despite its huge energy reserves, Iran has for years struggled to meet its domestic fuel needs because of a lack of refining capacity and international sanctions that limited the supply of spare parts for plant maintenance.
U.S. President Donald Trump pulled out of an international nuclear deal with Iran last year and reimposed sanctions on Iran’s vital oil industry and other sectors.
A drop in the Iranian currency following the reimposition of sanctions has disrupted Iran’s foreign trade and boosted annual inflation, which the International Monetary Fund forecasts at 35.7% this year and 31% next year.
Reporting by Dubai newsroom; Editing by Lisa Shumaker and Steve Orlofsky