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Sun 6 May 2007 02:21 PM

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Iran gas oil price hike rejected

The country's parliament voted against a proposal to almost treble the cost of diesel fuel.

Iran's parliament on Sunday voted against a government proposal of gas oil used as diesel fuel for trucks and for heating homes, official media reported on Sunday.

Refined oil and gas products are heavily-subsidised in resource-rich Iran, encouraging consumption as well as draining state coffers, but raising prices is politically sensitive as the country struggles with high inflation and unemployment.

One hundred and ten parliamentarians voted to remove a proposal included in the 2007 budget to increase the gas oil price to 450 rials (less than 5 U.S. cents) per litre from 160, the IRNA news agency said. Sixty-five MPs were against.

The world's fourth biggest oil exporter also has to import about 40 percent of its gasoline needs because of a shortage of refining capacity. Parliament has backed plans to raise prices and ration the fuel to restrain consumption.

Cheap, abundant fuel is considered a right by many Iranians.

World powers have imposed U.N. sanctions on Iran because of its refusal to rein in its nuclear activities. But Western diplomats say fuel imports are unlikely to be targeted because it would hurt the public not the government.

The West accuses Iran of seeking to build atomic bombs under cover of a civilian nuclear programme, a charge Tehran denies.

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