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|**Country E R**|**Pricing policy and strategy**|**Fuel supply conditions**|
|---|---|---|
||_Note_: US$1=Rls 10,616 in 2011 and 12,176 in 2012, but as high as<br>35,000 in 2012 on the parallel market.<br>For regular gasoline, government vehicles and those used mostly in<br>agriculture and industry were in the first price category until Jun<br>2011, after which this category was eliminated altogether; domestic<br>vehicles with an engine size smaller than 2 liters in the second, with<br>the engine size reduced to 1.8 liters in Jan 2013; and all others in the<br>third. For diesel, public transport and industry are in the second<br>category and others in the third. There is a quota for each category,<br>depending on vehicle type, size, and location. The large price<br>increases invited much criticism from Parliament, which in 2012<br>amended the Targeted Subsidies Reform Act to change “no less than<br>90%” of FOB prices to “no more than 90%,” thereby turning price<br>floors into ceilings and entrenching price subsidies. Parliament<br>rejected the proposal to increase prices in 2012, and depreciating<br>currency means that domestic prices are declining in real terms.<br>Nevertheless, it is significant that price increases as large as the ones<br>effected in Dec 2010 were not rolled back. Government combined an<br>effective communication strategy with nationwide cash transfers to<br>mitigate the adverse effects of price increases for petroleum products<br>natural gas, electricity, and water.<br>**Social protection and compensation**: To compensate for higher<br>energy prices, the reform law authorizes using up to 50% of the<br>savings from subsidy reduction for cash and in-kind payments to<br>families, taking their income levels into account, and for a social<br>security system; 30% of the savings to provide soft loans and credit<br>lines to industries; and the remaining 20% to other government<br>programs and infrastructure investment. In 2011, government did not<br>target cash transfer to low-income households and instead paid Rls<br>455,000 (US$43 at the official exchange rate in 2011) a month to<br>virtually all Iranians (about 73 million recipients), the total amount o<br>which exceeded the savings from all the price and tariff increases of<br>about Rls 30 trillion. Parliament in 2012 increased the allocation to<br>cash transfers to families from 50% to 80%.<br>**Effect on demand**: The consumption of every fuel fell in 2011, led<br>by a 36% drop for fuel oil, 11% for LPG, and 10% for diesel.<br>Apparent consumption, however, increased markedly in 2012.|<br> <br> <br> <br>,<br> <br>f<br>designed to produce gasoline, to produce it.<br>**Smuggling**: Fuel is smuggled out of Iran<br>along the borders with Pakistan, Turkey,<br>and Iraq, and southern coasts of Iran. In Feb<br>2012, the deputy director of the Department<br>for Campaign against Smuggling of Goods<br>and Foreign Currency said that some 3<br>million tonnes of fuel had been smuggled<br>out of Iran since Mar 2011, significantly<br>lower than the corresponding period two<br>years earlier. In Dec 2012, Oil Minister<br>announced that subsidized gasoline would<br>no longer be available in the border areas.<br>In Feb 2013, government was reported as<br>having begun coding smart cards to prevent<br>misuse, particularly loaning smart cards to<br>smugglers, and selling gasoline at Rls<br>15,000 (US$1.22)/liter in the border areas.<br>Official statistics further reportedly showed<br>that fuel smuggling declined from 10<br>million liters a day in 2008 to 3 million<br>liters in early 2011, but, with currency<br>depreciation, rose to 8 million liters (6<br>million of diesel and 2 million of gasoline)<br>a day by late 2012 and early 2013.|
|Iraq<br>√<br>√|<br> <br>**Pricing policy**: Government initiated administered official price<br>adjustments at the end of 2005. Direct budgetary subsidies for<br>imported fuels (except kerosene) were eliminated in 2007. Indirect<br>subsidies for domestic crude/products were reduced from 10.5% of<br>GDP in 2006 to 1.5% in 2009, but remain (source IMF).|**Supply**: Iraq’s refineries are in disrepair<br>after decades of heavy subsidies.<br>**Impact of power shortages**: Gasoline<br>demand soared in 2010 as many turned to it<br>to compensate for power shortages.|
||**Consequences of subsidies**: Large differences between black<br>market and officialpricespersist.|<br>**Commercial malpractice**: Black markets<br>for petroleum products continue to flourish.|
|Jamaica<br>√|<sup>**Pricing policy**: Although petroleum product prices are deregulated</sup><br>in Jamaica, ex-refinery prices continue to be set based on import<br>parity prices. The current pricing mechanism is being administered<br>by Petrojam, which is government-owned. Government in Apr 2011<br>reduced ad valorem tax on fuel, reinstituted in Jan 2010, from 15%<br>to 10% on a temporary basis, and said that it would be reviewed<br>quarterly.<br>**Information**: Petrojam posts historical and current ex-refinery<br>prices, inclusive of taxes, on its Web site. Distribution margins are<br>added to the posted prices, and retail prices can be quite a bit higher.|<br> <br>**Supply**: Jamaica has a 35,000 bpd refinery,<br>owned by Petrojam. A PetroCaribe member<br>since 2005, Jamaica imports oil from<br>Venezuela at only 60% of the market price,<br>with the remainder offset as a long-term,<br>low-interest loan. As part of the<br>PetroCaribe agreement, Venezuela bought<br>49% of the shares in the refinery in 2008.<br>The planned expansion of the Petrojam<br>refinery would cost 10% of GDP in<br>cumulative terms. The number of oil<br>shipments per week under the PetroCaribe<br>accord was reduced from 3 to 2 in May|