Fuel rationing has forced Iran's largest car maker to scale down the manufacture of gasoline powered engines and increase production of dual-fuel cars that can also run on natural gas, the company's manager said Tuesday.
In an attempt to reduce Iran's multibillion dollar gasoline import bill, the government suddenly imposed fuel rationing last month, sparking riots and outcry among consumers used to subsidies.
Iran Khodro, one of the largest car manufacturers in the Middle East, opened its doors to international media on Tuesday to show off its industrial achievements and its ability to produce the dual-fuel cars, which can consume both gasoline and compressed natural gas.
Iran's state-owned car makers had anticipated fuel rationing and begun to adapt their production, said Manouchehr Manteghi, to company's manager.
"Of 2,200 cars we produce every day, 1,300 are dual-fuel cars," Manteghi told reporters. "In less than a month, it will reach 1,500 cars."
Iran is one of the world's biggest oil producers, but lacks enough refineries and must import more than 50 percent of the gasoline its people use.
After a 25 percent price increase imposed May 21, gas sells at the equivalent of 38 cents a gallon. The rationing system allows private drivers 26 gallons of fuel per month at the subsidized price. Taxis get 211 gallons a month.
Accustomed to years of low-cost gas, inexpensive cars and unreliable public transport, Iranians heavily rely on their car for transportation. Massive traffic jams are common in the capital, Tehran.
Iran's hard-line President Mahmoud Ahmadinejad made clear on Monday that drivers who use up their fuel rations would not be allowed to buy more gasoline at higher prices, calling suggestions to do so a "killer poison" that would worsen inflation.
"We won't give in to liberalization of the gas price," he was quoted as saying.
Rationing is designed to cut the $10 billion that the government spends each year to subsidize gasoline prices, and the president said the reduction will free up money for economic development projects that will make Iran "invincible."
Iran Khodro, which produces 600,000 cars each year, says it has also designed a natural gas-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 gasoline from abroad, it says.
The gas price increase in May and the rationing last month are feeding discontent with Ahmadinejad, who was elected in 2005 on a platform of helping the poor and bringing oil revenues to every family.
Ahmadinejad said reduced reliance on imported gasoline would make the country less vulnerable to international pressure, at a time when Iran is at odds with the West over its nuclear program.
Iranian experts had warned that Iran's oil spending could exceed its oil revenues within the next 10 years if fuel consumption was not contained. Iran's government currently earns 80 percent of its income from crude oil exports.
The government says fuel consumption has decreased since the rationing began last month. Officials also say pollution in Tehran is also down -- the result of less traffic.
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