Title: Government Considers Fuel Subsidy Overhaul to Foster Fairness and Efficiency
A New Approach to Fuel Management
In a move to address long-standing concerns over fuel consumption and subsidy distribution, the Iranian government is evaluating a significant policy shift. The current system, widely acknowledged as inefficient, has prompted a serious review of available options to create a more equitable and economically sound framework.
Three Policy Pathways
Analyses indicate that three primary proposals are under consideration. The first involves a three-tiered pricing structure for gasoline, establishing subsidized, secondary, and free-market rates. A second option proposes a uniform 50% price increase for both subsidized and free-market gasoline, coupled with the elimination of fuel cards for stations and annual price adjustments tied to inflation.
The third, and reportedly most favored, proposal is a fundamental restructuring of the subsidy system itself, shifting the allocation of subsidized fuel from vehicles to individuals.
Focusing on the “Per-Person” Fuel Plan
This “per-person” allocation model is gaining traction as a comprehensive solution. It aims to rectify the inherent inequity of the current vehicle-based subsidy, which is seen as a form of rent for car owners, by ensuring every citizen receives a direct and equal energy credit.
Under this plan, each Iranian would receive a subsidized fuel quota equivalent to 30 liters per month, or 120 liters for a family of four. Crucially, any unused portion of this monthly allocation could be sold on the energy exchange at a price close to the free-market rate, creating a direct financial incentive for conservation.
Driving Efficiency Without Price Shocks
A key advantage of this model is its potential to optimize consumption without imposing a broad price shock. Individuals would be motivated to use fuel more judiciously to benefit from selling their surplus credits. Furthermore, the plan effectively separates personal and commercial transportation fuel use.
The commercial transport industry would transition to using alternative, subsidized fuels like CNG, LPG, and electricity for its operational needs. This decoupling ensures that public and private transportation costs remain stable, shielding the economy from inflationary pressures related to fluctuating gasoline prices. This structured approach is designed to foster voluntary optimization, fairer subsidy distribution, and a more sustainable fuel consumption pattern for the nation.