Iran needs up to $5bn for fuel imports

Islamic Republic needs $5bn in addition to $3.3bn previously budgeted for year to March 2009.
Iran needs up to $5bn for fuel imports
By Parisa Hafezi and Edmund Blair
Sun 16 Nov 2008 04:21 PM

Iran's government needs up to $5 billion more to import fuel for the year to March 2009, in addition to a previously budgeted $3.3 billion, a senior oil ministry official said on Sunday.

Iran is the world's fourth-largest exporter of crude but lacks enough refining capacity to meet domestic gasoline needs, forcing it to import large amounts which it then sells at subsidised prices, burdening the budget.

To curb soaring consumption, Iran rationed subsidised gasoline from June last year. Officials say the move has helped reduce demand but Iran still relies heavily on imports.

"We have budget of $3.3 billion but the needs of gasoline and gas oil is more than the... budget that we have," Akbar Torkan, a deputy oil minister, told newswire Reuters, adding that the extra funds needed were "something between $4-5 billion".

"So we have decided to go to parliament to get new permission for extra gasoline and gas oil that is needed," he said.

The Iranian year starts in March.

Iranian media said in September the government would ask for an additional amount of $7 billion, while Torkan said earlier this year the government was expected to have to ask for $8 billion, but that amount had fallen with tumbling crude prices.

Oil prices peaked at $147 a barrel in July but have since tumbled to less than half that amount, trading at $56 on Friday. This, said Torkan, meant prices for oil products like gasoline and gas oil had also fallen.

Under Iran's gasoline rationing system, motorists are allowed to buy 120 litres per month at the price of 1,000 rials (around 10 US cents) per litre.

Some lawmakers have complained that the government has often ignored parliament in seeking extra funds for gasoline imports.

"In the past 18 months, the government was not granted any permission from parliament for fuel imports. It seems that the oil ministry has got used to permanently violating the law," a member of parliament's energy committee, Emad Hosseini, was quoted as saying by Iran's ILNA news agency.

The daily Iran News reported on Sunday that Iran had imported $2.53 billion of gasoline between March and October, with the United Arab Emirates the biggest single source, accounting for imports worth $204 million. (Reuters)

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