The Iranian government has increased petrol prices by at least 50 per cent in an unpopular move as the administration of Hassan Rouhani struggles to offset the impact of US sanctions and a sharp fall in its income.
Tehran authorities announced at midnight on Thursday that each motorist could get 60 litres of petrol at IR15,000 per litre, a 50 per cent price increase. Extra fuel would be still available but at IR30,000 per litre.
The move comes after Mr Rouhani acknowledged this week that the Islamic republic faced a huge fall in its flow of petrodollars — the country’s lifeline — because of US sanctions since May last year.
Iran has vowed to resist the US’s toughest sanctions ever and not to retreat from its controversial regional and defence policies.
A rise in fuel prices can generate more income for the government to buy basic commodities and medicine and pay civil servants, workers and pensioners. But it can also put Iranian families under more pressure. Inflation is already above 40 per cent and the economy under “severe stress”, according to the IMF, which has predicted that Iran’s economy will contract by 9 per cent this year.
Many of the unemployed rely on cheap petrol to work as private taxi drivers. Breadwinners from smaller towns go to big cities during the week and sleep in their cars at night to work for ride-hailing apps.
Iran’s vice-president for budget affairs, Mohammad Reza Nobakht, said that about 60m people out of the 82m population would enjoy extra monthly bonuses to compensate for the rise in petrol prices.
“The president insists that all extra income should be paid back to people,” Mr Nobakht announced at midnight, in a clear move to allay public concerns about a further decline in their purchasing power. “The first payments will be handled within the next week or 10 days.”