Fuel smuggling to Pakistan declines after reforms

Fuel smuggling from Iran to Pakistan has recently spread to most parts of Pakistan due to the heavily subsidized, low price of energy in Iran prior to the implementation of the Targeted Subsidies Plan. Iran began its long-awaited energy subsidy reforms after months of speculation regarding the timing or degree of the subsidy cuts. The price of heavily subsidized gasoline (for the first 60 liters purchased by each motorist per month) was increased to 4,000 rials (US$0.38) per liter, from 1,000 rials (US$0.10) per liter. All gasoline purchased above the monthly quota will be priced at 7,000 rials (US$0.67) per liter. Iranian President Mahmoud Ahmadinejad announced the launch of his economic reform plan aimed at overhauling the country’s economy by phasing out energy and food subsidies. Under the plan, all subsidies are to be gradually removed during a five-year period. (December 21, 2010)