While subsidies are gradually lifted in order to bring prices up to international levels, Iranian police are guarding petrol stations.(photo, from bbcimg.co.uk)
Apparently anticipating unrest over the sensitive cuts to subsidies, groups of policemen have appeared at major intersections in the country’s capital, Tehran.
So far no disorder has been reported.
According to Iranian president Mahmoud Ahmadinejad cuts of energy and food subsidies would start from Sunday.
On Saturday Ahmadinejad said that the cuts in subsidies were the “biggest surgery” to the economy in 50 years, adding that his government was paying $4bn in bread subsidies, which are being gradually phased out.
The new system introduced on Sunday says each car would receive 60 litres of fuel per month at a subsidised price of 40 cents per litre, a four-fold increase. Further petrol purchased would cost 70 cents a litre, compared to 40 cents before.
Dozens of filling stations were set on fire in 2007, following the implementation of the system of fuel rationing.
Four rounds of UN sanctions have hit Iran’s oil-based economy, along with those from individual countries over its controversial nuclear programme.
But the Iranian government argued that the money from increased prices will be returned to the people through cash payments, thanks to its Subsidy Smart Plan.
However some economists expressed fear that the increased prices, which also apply to electricity, water, and flour, will fuel inflation, already thought to be running at 20%.