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Last Updated: Wednesday, 27 June 2007, 10:00 GMT 11:00 UK
Q&A: Petrol rationing in Iran
Iranians torch a petrol station in Tehran
Angry youths protested against the introduction of the petrol rations
Iran's government has withdrawn its petrol subsidy and introduced fuel rations, sparking angry protests amongst many motorists.

The government hopes to save billions of dollars and introduce free-market regulations for the country's fuel-thirsty drivers.

BBC Monitoring's Saeed Barzin explains.

What is the petrol rationing policy?

Every private vehicle will be allowed a limited subsidised petrol ration, above which drivers will have to pay a higher price.

Private cars are allowed 3.5 litres of subsidised petrol per day, state-owned vehicles 10 litres, and public transport vehicles a higher quota, yet to be announced.

The subsidised prices, at US10 cents per litre (1000 rials), are cheap by regional standards. The free market price is expected to go up to US 50-70 cents.

Millions of petrol-ration smart cards have been issued for car owners and petrol stations are equipped to accept them, but newspapers say hundreds of thousands have not yet received their card.

Why does Iran need petrol rationing?

Iran is one of the world's leading oil and gas producers and has some refining capacity, however the thirst for fuel is great.

An oil refinery and petro-chemical complex in Iran (file photo)
Iran's fuel was sold at about a fifth of its real cost under the subsidies

From the 4 million barrels produced every day, some 2.4 million are exported and the rest is for internal consumption.

Drivers use some 77 million litres of petrol daily and the figure is increasing fast.

The state has been subsidising fuel for many decades and Iranians are used to cheap petrol and transportation.

With limited refining capacity, the state has been forced to import increasing amounts of petrol, costing up to $5bn (2.5bn, 46,370 billion rials) a year.

The government now hopes rationing will save $3bn annually.

Is rationing a political issue?

Petrol rationing is a highly political issue and the government is worried about its implications.

Any substantial price increase would impact on the cost of transportation and consequently the cost of basic commodities.

Working-class families and those on fixed wages are already squeezed by high inflation, and would be hurt by further price hikes.

President Mahmoud Ahmadinejad and his supporters portray themselves as champions of the poor, and the political alienation of these classes could undermine an important section of the president's constituency.

The issue has been a topic of debate within the ruling establishment, newspapers and among ordinary people.

The government has been increasingly criticised for its economic policy.

Two weeks before the rations came into effect, 57 university professors issued an open letter criticising the government's economic policy.


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