TEHRAN • Iran will exhaust its annual budget for petrol imports by August 1, more than seven months before the financial year ends, if fuel consumption continues at the same pace, officials said in remarks published yesterday.

Opec’s No. 2 oil producer, which lacks refining capacity to meet domestic demand and imports 40 per cent of its fuel, allocated $2.5bn for imports until March 19, 2008.

That was half the amount spent last year but consumption was expected to drop with plans to ration gasoline.

But rationing has only been partially implemented and even though the price motorists pay for fuel was raised 25 per cent to 1,000 rials (11US cents) a litre, it remains some of the cheapest in the world and analysts say this encourages waste.

“By continuing the current pace of consumption, the $2.5bn budget for importing gasoline will be finished in the first 10 days of (Iranian month of) Mordad,” Ali Farahani of the National Oil Products Distribution Co was quoted as saying.

His comments, carried by the daily Hamshahri, indicate that the budget allocation would be spent by August 1.

Hojjatollah Ghanimifard, international affairs director of the state-owned National Iranian Oil Company, also said the budget would last a further month and a half, taking it to early August, the Oil Ministry’s official website reported.

The government originally allocated $2.5bn in the year to March 2007 but asked parliament for more when cash began running short. It eventually spent about $5bn on imports.

All fuel for motorists is subsidised which is a heavy drain on state coffers. It also encourages waste and a thriving smuggling trade to neighbouring countries where gasoline is far more expensive, analysts say.

It is still not clear when or if rationing will be implemented. A deputy interior minister, Mojtaba Samareh-Hashemi, said in remarks published by newspapers yesterday that rationing would be introduced gradually.

Some lawmakers have said rationing should be or already has been scrapped.