23 had owed them US$1 billion for subsidy reimbursement. Kerosene is more heavily subsidized than gasoline on paper, but the actual retail prices are routinely double to triple the official price and not just in times of acute shortages (PwC 2015). Kazakhstan has also had periodic fuel shortages due to price controls and trade restrictions.

A large price difference between two substitutable fuels is a leading cause of corruption. Premix in Ghana provides an example. Premix is gasoline with low octane intended for fishing vessels, and has historically been priced half or less of gasoline. The financial incentives for diverting premix are so powerful that members of the National Premix Committee, set up to tackle illegal diversion, have themselves been accused of participating in commercial malpractice (GhanaWeb 2015a).

Adulteration of diesel with kerosene is one of the most common forms of commercial malpractice. The financial incentive is provided by the price of kerosene being lower than that of diesel, and the fact that a considerable amount—say 30 percent—can be added to automotive diesel without immediate detection. This is in contrast to adulteration of gasoline with kerosene, which is detected much more readily because even a 5‐percent addition of kerosene to gasoline could lead to knocking. Of the 44 countries in Figure 4, kerosene prices were lower than diesel prices in 31, less than two‐thirds of diesel prices in 12, and less than half in four. In India, where the price of subsidized kerosene intended for household use is one‐third to one‐fourth of the price of diesel, adulteration is rampant as well as well‐ organized, and several people who have tried to expose adulteration, including an investigative journalist, have been murdered ( _Hindu_ 2011; _Hindustan Times_ 2011). For its 2015/16 budget, the Government of Tanzania proposed to increase the petroleum tax on kerosene by twice the amount as that for diesel in order to combat fuel adulteration, with the goal of using the extra revenue generated for rural electrification (Tanzania 2015). In Bangladesh, Jordan, and Nepal, kerosene and diesel prices are identical, eliminating this source of commercial practice. By contrast, Sri Lanka has substantially widened the price difference between kerosene and diesel in the past year.

The scope for commercial practice is even greater when the same fuel has multiple prices depending on the purchaser. Examples include LPG in Indonesia, where there is nearly a three‐fold difference between LPG sold in 3‐kg and 12‐kg cylinders; kerosene for household use versus other uses in India and Malawi; and natural gas for residential versus other consumers in Ukraine, where gas for households is being diverted to industrial consumers facing higher tariffs. India is tackling diversion of subsidized LPG by implementing the Direct Benefits Transfer for LPG (DBTL) program. A price subsidy is no longer provided for household LPG, and instead cash equivalent to the subsidy is transferred directly to the bank accounts of registered participants. The Ministry of Petroleum and Natural Gas recently attributed the strong growth of bottled LPG for commercial and automotive uses to the DBTL’s curbing of diversion of subsidized LPG (PPAC 2015).

Subsidized prices covered by the budget also provide opportunities for fraudulent claims. There are numerous ways of manipulating claimed costs, including false claims on the volume delivered, exchange rate manipulation, falsifying dates of the bills of lading, inflating storage and transportation costs, and falsifying the destination of fuel delivery (to claim longer distances). In extreme cases, companies with no import, storage, or distribution facilities have been known to claim subsidies for fuel imports and sale, as in Nigeria in 2011. A series of government‐led investigations into suspicious claims made in