Iran signals delay in gasoline rationing plan

TEHRAN, May 21 (Reuters) Iran signalled today it would delay this week's planned gasoline rationing and price hike scheme, which has sparked confusion and concern about the impact on the poor in the oil-rich Islamic state.

State television said the government's plan to limit the sale of heavily-subsidised fuel and increase the price by 25 per cent would now not take effect from tomorrow.

Iran imports 40 per cent of its gasoline needs because of a lack of refining capacity. Subsidies for some of the cheapest fuel in the world are draining the state coffers of OPEC's second largest crude producer.

President Mahmoud Ahmadinejad's government says rationing and a higher price will help reduce Iran's heavy reliance on expensive imports, particularly when Tehran faces further United Nations sanctions over its disputed atomic programme.

But officials have sent conflicting signals in recent days about when they will take effect.

Television quoted the government's spokesman as saying the price of gasoline would only increase when the rationing gets under way and that it would remain at the present level for now.

''As long as the rationing has not started, the price of gasoline will not change and it will remain 800 rials (about 9 US cents) per litre,'' Gholamhossein Elham said.

Other officials indicated earlier that at least the rationing could be delayed, while it was unclear whether the price would go up in line with the timetable.

''The price of gasoline (from May 22) is not yet clear and finalised,'' Deputy Oil Minister Mohammad Reza Nematzadeh told the semi-official Fars News Agency.

CROWDED PUMP STATIONS Analysts have said the government, which draws backing from Iran's poor, could get cold feet because the plan may stoke inflation, running at above 17 percent. Past fuel price rises have quickly pushed up other costs.

''I don't understand why they are causing such confusion for the people,'' one taxi driver in the capital complained. ''No one knows how much the gasoline will cost and how much we will receive per month. They don't know themselves.'' Ahmadinejad has hinted the scheme may be postponed following reports of technical hitches in distributing the electronic smart cards motorists will use to buy subsidised fuel.

Some Iranians have not received them and state radio said the government said rationing would not start until everybody had one.

It has yet to say how much fuel drivers will get.

Fars highlighted the confusion in a report citing two government officials, one of them saying the price will rise to 1,000 rials and the other saying it would remain at 800 rials.

''Publishing contradictory reports over the price of gasoline may cause corruption ... and misuse by some station owners is possible,'' it said.

State radio reported queues for fuel of up to two kilometres in some parts of Tehran late yesterday, but there were no signs of queues today morning, witnesses said.

Economists say the subsidies encourage waste, hurt the environment and burden the budget. Iran last year spent 5 billion dollar on gasoline imports, but many Iranians regard abundant and cheap gasoline as a national right.

World powers have imposed sanctions on Iran for refusing to rein in its nuclear work, which they suspect is aimed at making atom bombs. The United States has said Iran's dependency on fuel imports gave Washington ''leverage''.

REUTERS SKB KN1804