CNG Consumption Rises 11% After Iran Raises Third-Tier Gasoline Rate

**TEHRAN —** Compressed natural gas (CNG) consumption in Iran rose by approximately 11% during the first week after the government changed the country’s third-tier gasoline rate, according to Mohammad-Sadegh Azimifar, deputy oil minister and managing director of the National Iranian Oil Products Distribution Company.

The increase amounted to roughly 2 million cubic meters per day compared with average consumption in the first half of Shahrivar and in the month of Mordad, the company said in a report carried by the Islamic Republic News Agency, or IRNA. The report did not provide the total national volume of CNG consumed during the comparison periods.

The policy change took effect on Tuesday, September 8, according to the supplied report. Under the new arrangement, the price of gasoline dispensed through fuel cards at service stations—described as the third-tier rate—was raised from 50,000 rials to 100,000 rials per liter.

The government kept the first- and second-tier subsidized gasoline allocations unchanged at 15,000 and 30,000 rials per liter, respectively. The policy therefore targeted fuel purchased through station cards rather than the subsidized quotas assigned to citizens.

### Government links CNG increase to gasoline policy

Azimifar said the rise in CNG consumption, together with a corresponding reduction in gasoline consumption, demonstrated a positive effect from introducing the higher third-tier rate. He said the measure was intended to address an imbalance between gasoline supply and demand and reduce reliance on imports.

The supplied report does not provide a separate figure for the reported reduction in gasoline consumption. It also does not identify the methods used to calculate the 11% increase in CNG use beyond comparing the first week after the change with average consumption during earlier periods.

The government has presented the measure as part of a gradual effort to reorganize fuel distribution. According to the report, officials sought to avoid an abrupt change affecting household fuel allocations and general consumption while directing the price increase toward what they described as less transparent consumption, luxury vehicles and misuse of free fuel cards.

The report said the approach was designed to shield more than 85% of the population and public consumption from sudden price changes. It did not provide further details about how that percentage was calculated.

### Free CNG conversions for high-mileage vehicles

Alongside the change in gasoline pricing, the National Iranian Oil Products Distribution Company is prioritizing a program to convert high-mileage vehicles used by internet-based passenger and freight transport platforms to CNG at no cost, Azimifar said.

The report described the conversion program as ongoing but did not state how many vehicles had been converted, how many were eligible, or when the program would be completed. It also did not quantify the contribution that converted vehicles may have made to the reported increase in CNG demand during the first week of the new gasoline pricing policy.

### A staged fuel reform

The adjustment was described as the second phase of the government’s fuel-distribution reform. Fatemah Mohajerani, the government spokesperson, announced the change in mid-Shahrivar, saying that the price charged through station fuel cards would rise to 100,000 rials from the early hours of September 8.

The decision followed a government resolution from the previous year that, according to the report, provided for the third-tier gasoline rate to be reviewed every three months. The government chose to double the rate while leaving the two subsidized allocations unchanged and postponing decisions concerning possible further price increases or fuel subsidies for households.

The reported shift toward CNG suggests that at least some motorists responded to the higher cost of fuel purchased through station cards by using an alternative fuel. However, the available evidence covers only one week and comes from a report citing the national oil-products distribution company. It does not establish whether the increase will persist, whether it was concentrated in particular regions or vehicle categories, or how much of the change resulted directly from the new gasoline rate rather than other factors.

For now, the government is presenting the early consumption figures as an indication that the third-tier rate can influence fuel demand without changing the subsidized quotas used by most households. Further data would be needed to assess the policy’s longer-term effects on CNG consumption, gasoline demand, imports and the financial burden on consumers.