Iran Economy News Iranians shocked by power bills as subsidy slashed

Iranians shocked by power bills as subsidy slashed

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Reuters: Many Iranian householders have been stunned by huge electricity bills after the government suddenly withdrew fuel subsidies without warning exactly when the cuts would fall.

By Robin Pomeroy

TEHRAN, Sept 21 (Reuters) – Many Iranian householders have been stunned by huge electricity bills after the government suddenly withdrew fuel subsidies without warning exactly when the cuts would fall.

Consumers said on Tuesday their bills were as much as 1,000 percent higher than last month — the first hit from President Mahmoud Ahmadinejad’s sweeping plan to save the state the $100 billion it currently pays to subsidise essential goods.

Ahmadinejad calls the subsidy reform “the biggest economic plan in the past 50 years” and while Western economists say it is a necessary step to reduce waste, they have warned that any sudden price hikes risk igniting public unrest.

The president’s political rivals within the conservative ruling elite are also likely to blame him for any backlash over the plan which was meant to start six months ago but was delayed due to disagreements between Ahmadinejad and parliament.

A customer in Tehran was told that her two-month bill had gone from 800,000 rials (around $80) to 5 million rials due to the combined effect of the subsidy cut and a policy of increase charges on high consumers.

A parliamentarian in the north-eastern city of Gorgan said some of his constituents’ bills had increased tenfold.

“According to what parliament approved, the price of goods and services should rise slowly and reach their real price over five years so people don’t feel the pressure on their daily lives,” Abdolhossein Naseri was quoted as saying by the semi-official Mehr news agency.

Iranians had been bracing for fuel and food prices to rise steeply when the subsidy cuts take effect, due to happen during the second half of the Iranian year, which begins on Thursday.

Last week a government official said gasoline subsidies would remain for at least one month beyond that date — a delay some analysts saw as a sign the government might be getting cold feet over the potentially unpopular policy.

Iran’s oil-based economy is already under pressure from sanctions which make it harder for companies to make international transactions and for the Islamic Republic to find foreign investment for its vital energy sector.

Ahmadinejad has dismissed the sanctions — aimed at pressuring Tehran to curb its nuclear programme — as ineffective and says the subsidy cuts will also be painless.

Before leaving for the United Nations General Assembly in New York, he said there would be “no negative consequences with this plan” as long as poorer families receive hardship payments he has promised and Iranians acted with a spirit of cooperation.

In an interview, he said the government was deliberately not announcing the exact timing of the cuts to avoid hoarding of staple items and chaotic scenes at gas stations.

Outside the highest levels of government, politicians and clerics have warned citizens to brace for hardship.

“People should prepare themselves for a hard time,” said lawmaker Mohammad-Reza Khabaz. “The Iranian nation should endure the period of convalescence after this surgery.”

(editing by Paul Taylor)

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