Iran 's government is starting the phased removal of fuel subsidies with cash payments into personal accounts Tuesday, a semi-official news agency said on the same day.

"Cash subsidies will be credited to people's accounts in the provinces of North Khorasan , South Khorasan and Khorasan Razavi Tuesday," the Mehr news agency said. "People in other provinces will receive cash subsidies within two weeks."

The measure has long been announced but the exact timing of its implementation was unclear. The move comes after U.S. sanctions enacted this summer on the country's gasoline imports and has sparked fears of a repeat of 2007 riots over petrol rationing.

Under a subsidy reform plan adopted by Parliament prior to the gasoline sanctions, Iran plans to eliminate the subsidies on fuel, electricity and basic goods over five years. But to make up for any financial hardship suffered by the less well-off families, they will receive direct cash payments to their bank accounts.

Heavy-fuel subsidies have long been considered a birthright in oil-rich Iran .

That changed when in 2007, the government rationed private motorists to make up for the impact of mounting sanctions. Iranians reacted by setting fire to petrol stations in Tehran .

Iran has reacted to the latest round of sanctions over its nuclear program by increasing gasoline output, including a move of temporarily converting petrochemicals unit into refineries.

However, Iran 's economy is under increasing strain from the sanctions, from inflation, joblessness, and mounting shortages.

The West suspects Iran 's nuclear program has a military purpose, which the country denies.
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