18 automotive LPG market and large price subsidies have both been blamed for acute LPG shortages, prompting commercial LPG vehicle drivers to ask the government for subsidy removal so as to ensure reliable supply (All Africa 2011e). Ghana raised the price of LPG by 50 percent in February 2013.

# **_Abuses_**

Commercial malpractice is one of the most common outcomes of price control that keeps prices artificially low. A news report from Nigeria offers an illustration. The report cites five illegal alternative markets for subsidized kerosene, the price of which has been kept at about onethird of the market price to help poor households with lighting and cooking (All Africa 2011d):

1. Much higher prices of kerosene on the black market

2. Adulteration of diesel with kerosene 3. Diversion of subsidized kerosene for household use to the aviation fuel sector 4. Out-smuggling to neighboring countries 5. Presenting subsidized kerosene as having just been imported to claim the subsidy reimbursement for the second time Governments around the world have tried chemical markers, color dyes, and tracking of delivery trucks to stem adulteration of diesel with kerosene. Unlike addition of kerosene to gasoline, which can be fairly readily detected by vehicle drivers unless kerosene is added in small quantities, large amounts of kerosene can be added to diesel fuel without immediate detection. In South Africa, where there is a price difference of about US$0.30 a liter between kerosene and diesel, there is a levy charged to diesel for a dye added to kerosene to distinguish it from diesel. Similarly, the Petroleum (Amendment) Rules of 2000 in Kenya stipulate that all fuels intended for export and illuminating kerosene for domestic sale be chemically marked. However, color dyes can be removed, effective use of chemical markers requires tests, and all detection procedures require honest and competent inspectors who will not be tempted to overlook violations for informal fees. Perhaps just as important, if financial returns are sufficiently high as to attract organized crime, whistle blowers may even be physically threatened. In India, several murders have been linked to exposure of diversion of subsidized kerosene ( _Hindu_ 2011; _Hindustan Times_ 2011).

Ultimately, as long as the price of kerosene is markedly lower than that of diesel, commercial malpractice will occur. Comparison of kerosene and diesel prices in July 2012 in 44 of the study countries shows that kerosene was much cheaper than diesel in nearly one-third of the countries (Table 6). In Bangladesh, Nepal, Tanzania, and Vietnam, which at one point in time in the past priced kerosene below diesel but have equalized them since, kerosene consumption fell and diesel consumption rose markedly immediately after price equalization, strongly suggesting that cheaper kerosene was indeed being added to diesel.

Table 6: Ratio of retail prices of kerosene to diesel in July 2012

|Ratio of|kerosene to dies|el prices|Number o|f countries with|price ratio in g|iven range|
|---|---|---|---|---|---|---|
|Minimum|Maximum|Median|<0.5|0.5–0.75|0.75–1.0|≥1.0|
|0.30|1.22|0.85|3|10|18|13|

_Source_ : Figure A3.5 in Appendix 3.

Fuel smuggling is a serious problem in a number of countries. Notable examples of countries battling out-smuggling include Angola, Bolivia, Egypt, Ghana, Indonesia, the Islamic