Official: Paying subsidies no longer possible

TEHRAN (FNA)- Two subsidiaries of the oil ministry, the National Iranian Oil Products Distribution Company (NIOPDC) and the National Iranian Gas Company (NIGC), will no longer be able to provide fund for payment of subsidies as of the next Iranian year (starting in March, 2014), a senior oil ministry official said.

Deputy Oil Minister for Planning and Supervision on Hydrocarbon Resources Mansour Moazzami told the oil ministry’s website if payment of subsidies  continues over the next year, reforming the price of fuels will be a requirement in order to make the prices rational.

He said under an established financial arrangement, all the revenues are made from selling natural gas and oil products are deposited into treasury and then each company receives its allocated share. He continued: but unfortunately no action has been taken in this regard and that is why oil industry subsidiaries are tightly faced with financial shortages.

“Out of 3.5 trillion rials the government pays each month as subsidy, 2.5 trillion rials are provided by Petroleum Ministry so the ministry bears the bulk of responsibility in paying subsides,” the official said.

The veteran diplomat who assumed planning post in petroleum ministry following returning Bijan Namdar Zanganeh to the ministry said: under the current year budget law it was slated the subsidies to be paid through raising the price of energy carriers but unfortunately no especial measures have been taken in this regard which weigh on the shoulders of the oil industry.

Continuation of current procedures for payment of subsidies in no longer possible and will ruin the economic structures of the country further, according to Moazzami.

Deputy minister of petroleum added that petroleum ministry’s undertakings for payment of subsidies has led to suspension of implementation of key projects in oil industry and faced them with the problem of providing funds.

He expressed hope MP’s to take into account the issue and try to rationalize the price of energy carriers when they start debates for ratification of next year general budget because “development of oil industry depends on having access to more funds and support of all organs of the establishment”.

By Fars News Agency

 

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