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Last Updated: Wednesday, 19 October 2005, 10:10 GMT 11:10 UK
Burma ups petrol prices nine-fold
Traffic in Rangoon
The price hike will be a blow to car owners and taxi drivers
Burma is set to raise state-subsidised petrol prices nine-fold, with the new prices taking effect on Thursday, according to news agencies.

The increase has not been announced officially, but drivers learned about it from notices at petrol stations.

Correspondents say the hike will have a huge impact on car owners and could lead to inflation.

Burma, one of Asia's poorest countries, has to use valuable foreign currency to import most of its energy needs.

"A gallon of petrol or diesel will be 1,500 kyat ($1.22) with effect from 20 October," a manager of a state-owned fuel filling station told Reuters news agency on Wednesday.

The current fuel price is 180 kyat ($0.15) per gallon for petrol and 160 kyat ($0.13) per gallon for diesel.

Rationing

Under Burma's state petroleum network, car owners are allowed two gallons per day - a quota that will remain unchanged, according to the reports.

Currently people who want more fuel purchase it through the black market, which is thought to be larger than the state network.

Prices on the black market are far higher than in state-subsidised filling stations, with petrol often selling for about 2,400 kyat ($1.95) a gallon.

Because of this thriving black market, the state price hikes may not be as dramatic a move as they appear.

But analysts say they are still likely to have a significant knock-on effect on commodity prices and the wider economy.

Despite the lack of warning in advance of Wednesday's decision, some sort of increase had been long anticipated, because rising international fuel prices have been causing an increasing strain on government finances.

"Everybody around town has been saying that the increase in global oil prices has to be hurting [the authorities] badly," a Rangoon-based diplomat told Reuters.


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