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Sat 16 Feb 2008 05:28 PM

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Iran MPs approve $3bn fuel spending plan

Plan will fund diesel and petrol imports during the next year spurred by consumer demand.

Iran's parliament on Saturday approved a $3 billion spending plan to fund diesel and petrol imports during the next Iranian year, the official IRNA news agency reported.

MPs approved a budget allowing imports worth up to 30 trillion rials ($3.2 billion) in the new year beginning on March 20.

Iran has become a net importer of diesel and petrol because of high consumer demand, partly because it spends around $100 billion a year subsidising fuel prices.

Unleaded petrol in Iran currently costs around 1,000 rials (10 cents) a litre.

Iran, Opec's number two oil producer, makes around 45 million litres of petrol a day but has previously been forced to import up to 25 million litres extra every day to meet demand.

The government introduced fuel rationing in June in a bid to dampen demand, and since December drivers have been limited to buying 120 litres of petrol a month.

This has cut consumption, and the country is currently importing around 15 million litres a day.

Smugglers also illegally export diesel and petrol to neighbouring Iraq, Turkey and Pakistan, where it is sold for a profit.

MPs are also considering a dual pricing system under which non-rationed petrol could be sold alongside rationed subsidised fuel, the ISNA student news agency said.

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