Government seeks to free up energy prices suddenly: Iranian MP

TEHRAN, April 29 (MNA) – The Ahmadinejad government intends to free up prices suddenly but the society cannot tolerate such a sharp rise because there is already a high inflation and the first stage of the subsidy reform plan, which started in December 2011 was not implemented properly, said the chairman of the Majlis special committee tasked with the subsidy reform plan. For example, Gholam Reza Mesbahi Moqaddam said, energy prices have increased and families have been paid cash subsidies but the share of agriculture, industry, mines, and transportation has not been paid from revenues gained from increasing fuel prices and food. “The government’s strong emphasis on direct cash (subsidy) cannot resolve problems, rather it will cause problems and increases demand without any rise in supply,” Mesbahi Moqaddam told the Mehr News Agency. Mesbahi Moqaddam said Majlis is opposed to a sudden increase of fuel prices. “Majlis seeks a gradual implementation of the subsidy targeting and is opposed to any rush in this path.” He said the government has recently submitted a proposal to the special parliamentary committee seeking to gain about 110 billion dollars in the second stage through freeing prices fully. He said when government’s representatives faced a fierce opposition by MPs for gaining such a large sum of money they proposed 81 billion dollars but MPs said “gaining this amount of income from freeing energy prices is not tolerable by people.” The MP went on to say that the government, through increasing cash handouts, is trying to win public’s consensus for increasing energy prices and there is no will by government to support the production sector. Mesbahi Moqaddam, an economic expert, said the government intended to launch the second stage of the subsidy cut in February last year but Majlis prevented it. He said since Majlis has not yet approved the national budget bill for the current Iranian year (March 2012-March 2013) it still has time to decide about the pros and cons of the next stage of the subsidy reform plan. The MP said if government violates the law in implementing the next stage of the subsidy cut Majlis will file a compliant against it. In the new proposal the government plans to increase gasoline price to 90 percent of price delivery in the Persian Gulf which transport costs and a 20 percent tax should also be added to it. He predicted that in the current economic situation if fuel prices are freed up fully the agriculture and transport sectors, which are the main consumers of gas oil, will face great problems and “all factories will be closed.”