Venezuela's President Hugo Chavez said on Sunday that he had agreed to increase gasoline price from 3 U.S. cents to less than 5 U.S. cents a litre, which is still the cheapest in the world.

Chavez said the plan to increase gasoline prices would not affect the cost of living, because the price had not been raised in the last eight years.

He also rejected opposition warning that the increase could trigger a wave of protests and looting.

He said that he would reduce the fares of subways and trains and add modern and comfortable public buses to encourage people to use public transport.

He also announced a plan to eliminate vehicles that used gasoline in favor of vehicles that use natural gas, saying that "one day, all vehicles will run on gas."

An earlier version of this project had been sabotaged by the U.S.-owned multinational corporations, the president said, adding that Venezuela cannot continue wasting petrol.

Venezuela should follow Argentina's example, where vehicles run on natural gas, and also Brazil which is increasingly using ethanol, he added.

A founder of Organization of Petroleum Exporting Countries (OPEC), Venezuela has been leading the drive to increase oil prices within the cartel. The country's oil production is around 3 million barrels a day, accounting for one-ninth of worldwide output.

Source: Xinhua