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IRAN: Petrol rationing fuels CNG growth

By just-auto.com editorial team | 11 July 2007

Fuel rationing has forced Iran's largest car maker to scale down the manufacture of petrol powered models and increase production of dual-fuel cars that can also run on natural gas, the company's manager said.

In an attempt to reduce Iran's multibillion dollar petrol import bill, the government suddenly imposed fuel rationing last month, sparking riots and outcry among consumers used to subsidised prices, the Associated Press (AP) reported.

AP said Iran Khodro, one of the largest car manufacturers in the Middle East, on Tuesday unveiled - to international media - its ability to produce the dual-fuel cars, which can run on both petrol and compressed natural gas (CNG).

Iran's state-owned car makers had anticipated fuel rationing and begun to adapt their production, Manouchehr Manteghi, the company's manager, told AP.

"Of 2,200 cars we produce every day, 1,300 are dual-fuel cars," Manteghi told the Associated Press.

"In less than a month, it will reach 1,500 cars. We have also switched our production line to low fuel consuming cars," he added.

The news agency noted that, before rationing started last month, officials had suggested that drivers would be able to purchase extra fuel at a higher price than the subsidised cost for rationed fuel, but officials has said that now won't happen.

Iran is one of the world's biggest oil producers, but it doesn't have enough refineries and must import more than 50% of the petrol its people use, according to the report.

Rationing is designed to cut the $US10bn (EUR7.3 bn) that the government spends each year to subsidise petrol prices, and the president has said the reduction will free up money for economic development projects that will make Iran "invincible", the Associated Press said.

According to its report, Iran Khodro, which produces 600,000 cars each year, said it had also designed a CNG-based engine that is expected to reach mass production in October. This development will greatly help Iran reduce, and even stop in the long run, importing petrol, it said.

The news agency noted that Iranians are used to petrol at low prices - after the 25% price increase imposed on 21 May, petrol sells at the equivalent of 38 cents a gallon.

But the rationing system allows private drivers only 98 litres (26 gallons) per month at the subsidised price while taxis get 799 litres (211 gallons) a month, the report added.