Page 40 - IRANRptNov18

Iran’s petrol prices are the second cheapest in the world, trailing only those of Venezuela. That is partly down to the severe devaluation of the Iranian rial (IRR) in recent months and longstanding efforts made by the Islamic Republic to offer products to consumers at low prices.
Currently, according to the free market exchange rate, a litre of regular petrol at the pumps across Iran costs IRR10,000 ($0.07).
According to the newly proposed plan, car owners will again receive petrol at reduced rates. Premium fuel, used by people with cars that need a higher-octane product, will not be included in the scheme. It will be priced at a higher rate. Iran is mostly self sufficient in Euro-4 grade petrol and diesel. The country is also increasing its production of the newer Euro-5 grade product, thanks to the opening of the Persian Gulf Star Refinery on the country’s southern coast.
Construction of the refinery started in 2006, but the project became hindered by mismanagement as well as financial constraints due to international economic sanctions brought in to persuade Tehran to ensure that its nuclear programme was not directed at making a nuclear weapon. The refinery presently has a capacity of over 400,000 b/d, according to the latest government figures.
The Islamic Republic of Iran Customs Administration (IRICA) has reiterated that cars are still on a list of more than “luxury” 1,300 items that it is now illegal to import, IBENA reported on September 18.
In late June, as the US prepared its renewed sanctions assault aimed at throttling the Iranian economy, ministers introduced the list as a means of stemming hard currency outflows for the purchase of goods that could be manufactured domestically under the “resistance economy” strategy. Amid the collapse of the Iranian rial, officials have also moved to stop profiteering by shadowy entrepreneurs who access dollars or euros at preferential rates but charge the customer the full free market rate upon selling their merchandise. There are thought to be more than 12,000 imported cars currently impounded in customs yards across Iran. It is expected that they will be released gradually to the parties who ordered them at what officials deem to be the appropriate exchange rate. The situation has led to outbreaks of smuggling. In recent weeks, several photos appeared on Iranian social media of smuggled vehicles and parts. Several official dealerships for foreign brands and independent importers have had employees arrested and charged with smuggling offences.
Iranian officials have waved through a 20-25% price hike that applies to cheaper-model domestically-produced cars, the deputy chairman of Iran’s Parliamentary Committee on Industry, Darius Ismaili, said, Mizan Online reported on September 5. The measure, which came into effect on September 5, applies to vehicles priced below IRR450mn.
Prices of locally-made cars have exploded in recent months amid the economic turmoil sparked by the reimposition of heavy US sanctions. Auto producers have been forced to halt assembly lines because the collapse of the Iranian rial (IRR) against hard currencies caused difficulties in sourcing parts and made it difficult to price cars according to their real value. The tanking rial has caused an annual inflation rate that some foreign economists have measured at more than 200%. Tens of thousands of cars have remained uncompleted or have been withheld from the market after completion amid the economic strife.
Ismaili reportedly said that there was an agreement that the price increase would be applied retroactively to include pre-sold vehicles made by second largest Iranian automaker SAIPA.
40 IRAN Country Report November 2018 www.intellinews.com