14 government’s share of fuel subsidies in India has also been considerable. Once the additional burden-sharing by oil and gas companies are included, the combined sum amounts to about 2 percent of GDP.

Universal price subsidies are common, as are tiered prices by consumer category. Subsidized fuels may also be rationed. Setting different prices by end use is most common for LPG, where the distinction may be between automotive LPG and LPG sold in small cylinders for household use, and between LPG sold in small cylinders (typically smaller than 15 kg but as large as 48 kg in Thailand) for residential consumers and LPG sold in large cylinders or in bulk for other consumers. The differences in unit prices have been as large as 280 percent favoring LPG sold in small cylinders in India, 220 percent in Tunisia, 175 percent in Indonesia, and 170 percent in Thailand. In deregulated markets, unit prices decline with increasing cylinder size, − because of large economies of scale in bottling and distributing LPG (Kojima 2011, 42 44).

Price differentiation by use for gasoline, diesel, and kerosene also exists. Lower-priced diesel tends to be reserved for public transport, agriculture, and fisheries, and lower-priced gasoline for public transport and fisheries. These discounted fuels are typically rationed to discourage diversion. Lower-priced kerosene is almost always for households. Examples include subsidized kerosene for household use in India, two prices for the same grade of gasoline and diesel in the Islamic Republic of Iran, diesel for fishing boats in Malaysia, diesel for farmers in Kazakhstan and Russia, diesel for passenger transport in Peru, diesel for buses in Sri Lanka, and diesel for those consuming less than 4,000 liters a week in Nepal. An interesting case is the Green Fuel project in Thailand, which state-owned PTT (formerly Petroleum Authority of Thailand) launched in 2002 in response to fuel smuggling into the country. The project provides tax-free diesel, dyed green, to fishing boats to reduce incentives to use smuggled fuel. The Excise Department in 2010 stated that boats using green fuel were required to be fitted with a tracking device using a global-positioning system to monitor their whereabouts (Thai News Service 2010b).

Another way of lowering prices is to reduce taxes and fees levied. Tax cuts tend to be ad hoc, except in Chile which has formalized rules for adjusting the specific fuel tax to smooth enduser prices for small and medium-size consumers. Brazil, China, the Dominican Republic, El Salvador, Kenya, the Philippines, Rwanda, Senegal, Thailand, and Vietnam have all reduced taxes to lower end-user prices.

Several reasons are cited for providing fuel price subsidies, and helping the poor is always among them. In practice, universal price subsidies—even if they are available only to households—have been shown time and again to benefit the rich disproportionately. For example, studies of petroleum product subsidies in 13 countries consisting of eight in SubSaharan Africa, three in Latin America, Bangladesh, and Jordan show that, on average, the top two expenditure quintiles captured more than 60 percent of universal price subsidies (Coady et al. 2010). When diversion of subsidized fuels set aside for households—such as kerosene and LPG—is taken into account, petroleum product price subsidies become even more regressive, although when confined to household consumption only, kerosene subsidies have been found to be least regressive (Bacon and Kojima 2010a, 75–79; Kojima 2011, 28–30).

# **_Subsidies borne by fuel suppliers_**

In most countries with fuel subsidies, fuel suppliers bear some costs because reimbursements are seldom delivered immediately, or even at all, and fuel price increases are