The Trial Period For Raising The Prices Of Improved Gasoline Has Ended, And The Amount Of Revenues Is “Absent”, 17 OCT

 The Trial Period For Raising The Prices Of Improved Gasoline Has Ended, And The Amount Of Revenues Is “Absent”

2024-10-17 By Sotaliraq  The Iraqi government seems to be hesitant about the public outrage if it reveals the results of raising the prices of “improved gasoline,” especially since the pilot plan ended more than a month ago, which indicates that there are “hidden obstacles” behind the issue, according to observers.

On March 26, 2024, the Council of Ministers voted in a session chaired by Mohammed Shia al-Sudani to increase the price of improved gasoline from 650 dinars per liter to 850 dinars per liter, and premium gasoline from 1,000 dinars to 1,250 dinars per liter, starting from May 1 for a period of 3 months, after which the situation will be re-evaluated.

According to expert estimates, Iraq lost approximately 3 trillion Iraqi dinars on importing improved gasoline (which is the value of government support for improved gasoline) during 2023, stressing that these numbers have been the same for years.

The government has not yet received the evidence,

and Iraqis have strongly criticized the decision to increase fuel prices, considering that this step “is sufficient to raise the prices of all materials in the markets.”

Speaking of numbers, the Oil Products Distribution Company said (July 16, 2024) that it sold about 977 million liters of gasoline (improved, regular, and super) during the month of June of this year, without disclosing the financial returns from these numbers.

In this regard, economic expert Nabil Jabbar Al-Tamimi believes that “Iraq’s imports of petroleum derivatives have increased over the past four years, as a result of the increase in consumption and the growing demand for fuel (high-octane improved) that local refineries do not provide.”

Al-Tamimi says that “annual fuel imports have reached about $3 billion, which is a large number and unreasonable for a country considered one of the largest oil producers to import gasoline at these numbers.”

The latest government move came months ago, according to Al-Tamimi, as a bold step to raise the prices of some petroleum derivatives by 20-30%, stressing that “this step was accompanied by the government’s opening of the Karbala refinery, and also the return of production lines in the Baiji refinery.”

This year, the Iraqi government reopened the northern refinery in Baiji in Salah al-Din Governorate after rehabilitating it, following its closure for more than 10 years. It also announced at the end of last year the opening of the Karbala oil refinery with a production capacity of 140,000 barrels per day, including “improved gasoline.”

Al-Tamimi added, “These refineries were able to cover a large percentage of imports, which amounted to 15 million liters per day,” adding, “Such a step may contribute at the end of the year to saving large amounts of money that go to imports, provided that the government makes reforms to the laws of public companies, including oil refining and distribution companies, to increase the treasury’s share of these revenues that came as a result of government steps to establish new refineries and open production lines, in addition to setting a new price for oil derivatives.”

A few days ago, the Ministry of Oil issued a new statement about “improved gasoline,” confirming that Iraq will achieve self-sufficiency in improved gasoline next year, while confirming that it has achieved self-sufficiency in gas oil and kerosene products.

The decision to raise gasoline prices will continue for a long time.

According to Nabil Al-Marsoumi, an economics professor in Basra, the cost of importing improved gasoline in 2022 is 1,700 dinars per liter, while the cost of importing regular gasoline is 900 dinars per liter, indicating that the state is losing money on all types of gasoline.

In contrast, Mustafa Hantoush, an economic researcher, says, “The government is currently unable to restore the price of improved gasoline to what it was before, except after exports stabilize at the new Baiji and Karbala refineries.”

According to Hantoush, Iraq is still heavily dependent on importing improved gasoline, as local production cannot meet the large and growing need in the Iraqi market.

Hantoush continues, saying, “The Iraqi citizen is the one most affected by the decision, given that raising the price of fuel always leads to raising the prices of all food and non-food items in the markets in general.”

Regarding the possibility of raising prices again, Hantoush expects that “the government is not currently considering such a step,” stressing that “the current prices of both improved and regular gasoline will remain like this for a long time.”

According to readings by economic experts, the government has been providing support of up to 20% of the value of improved and super gasoline over the past years, which has placed a burden on the financial budget.

Iraq consumes between 27 million and 31 million liters of gasoline per day, while production is about 50% of the market's need, according to experts.

Iraq has also imported gasoline and gas since 2003 until now at a cost of about 70 billion US dollars, and it also imported 26 million liters of gas oil per month.  LINK