Fuel prices in Iran increased by more than 30 per cent yesterday after a government decision to lift a subsidy on oil derivatives.
The cut is part of a 2010 government approved plan to gradually lift subsidies on energy derivatives.
Iran’s Deputy Petroleum Minister, Abbas Kazemi, said the subsidy cut includes all oil derivatives.
With this plan, Tehran seeks to save nearly $12 billion a year in order to reduce the budget deficit. The Islamic Republic has been suffering from the repercussions of the sharp decline of global oil prices which caused a significant drop in the Treasury’s revenues.
Al-Jazeera reported Iranian consumers criticising the decision as “bad because it will raise consumer prices, which will increase economic pressure on Iranians”.
The Iranian government says it will use the money saved to develop the housing sector and create new jobs in a country where the unemployment rate exceeds 10 per cent.