Iraqi Government to Increase Fuel Prices by 15%

February 23, 2007

Consumer fuel prices will be hiked by around 15 percent in March as Iraq implements an agreement with the International Monetary Fund to cut subsidies, Oil Minister Hussain al-Shahristani said.

Iraq has the world's third largest known oil reserves but decades of war, sanctions, under-investment and now widespread violence and sabotage have left it critically short of fuel. It has to import much of its gasoline.

The government continues to control prices, fostering a thriving black market in fuel for those unwilling to queue for hours, sometimes days, to fill their vehicles.

Shahristani told Arabiya television in an interview broadcast on Friday the price of benzene would rise from 350 dinars (about 27 U.S. cents) to 400 dinar and the price of gasoline would rise from 300 dinar to 350 dinar by mid-March.

Iraq won a loan accord with the IMF in December 2005 and a $14 billion debt swap with private lenders. Since then, the price of a litre of ordinary gasoline has risen from 20 dinars.