Iran's parliamentary energy commission said on Sunday Tehran should tap its dollar reserves to avoid politically sensitive gasoline rationing or inflationary price hikes at the pumps before March 2007.
Parliamentarians in gas-guzzling OPEC heavyweight Iran approved a budget for the year to March which sliced the amount to be spent on gasoline imports to $2.5 billion from $4 billion.
This meant President Mahmoud Ahmadinejad's populist government, which draws its support from the poor, was faced with an unappetising choice of hiking petrol prices or rationing fuel from September, a potential source of social discontent.
Kamal Daneshyar, the head of parliament's energy commission, said this funding crunch should be avoided by withdrawing cash from the Oil Stabilisation Fund (OSF), a rainy-day kitty brimming with petrodollars.
Iran valued the OSF at $19.4 billion in January.
"The government only has one choice: to amend the budget and get $5 billion from the Oil Stabilisation Fund to import gasoline and diesel," he told Reuters.
Daneshyar said his commission had set the government 25 targets, mainly improvements of public transport, before rationing could be imposed.
"The rationing of gasoline will be illegal as the government cannot fulfil these conditions within six months," Daneshyar added, saying $3.5 billion was needed for gasoline imports and $1.5 billion for shipping in diesel.
Once a specialist commission develops a policy, it is then presented for parliamentary debate as a bill.
VORACIOUS GASOLINE HABIT:
Although Iran holds the world's second largest oil reserves after Saudi Arabia, it lacks refining capacity and needs to import more than 40 percent of its astronomical 60 to 70 million litres per day gasoline consumption.
The Iranian government pays enormous subsidies to keep the fuel cheap, causing heavy congestion and air pollution in the major cities. Gasoline fetches about nine cents a litre, creating a massive contraband trade with neighbouring states.
Daneshyar suggested cars should run on gas instead of gasoline, saving the holder of the world's biggest reserves of natural gas up to $7 billion a year.
"We import gasoline for 60 cents a litre and export each cubic metre of our gas, that has the same heating value, for two cents ... We should be proud of ourselves for doing such a stupid thing," he said.
Asian and European traders watch Iran closely for any suggestion of fluctuation in gasoline demand.
Many Iranian officials have argued Iran's dependence on imported gasoline threatens national security. It is a sensitive target for any sanctions imposed over Tehran's atomic work.
Iran has ambitious plans to upgrade refineries over the next five years and lift daily gasoline output to 120 million litres per day.
Iran's development expenditure under Ahmadinejad is putting unaccustomed strains on the OSF. Central Bank Governor Ebrahim Sheibani says the OSF has been presented with $24 billion of loan requests.
Traditionally the Central Bank says the fund should only be tapped when oil prices are perilously low and complains that unwarranted spending from it fires instant spikes in inflation.
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