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|**Country E R Pricing policy and strategy**|**Fuel supply conditions**|
|---|---|
|**Consequences of subsidies**: Compensation paid by government,<br>including arrears, is shown below:<br>Year<br>2009<br>2010<br>2011<br>2012<br>US$ million<br>102<br>138<br>141<br>95<br>% of GDP<br>1.1<br>1.5<br>1.1<br>0.6<br>_Source_: IMF.<br>**Social protection**: Government in Mar 2011 announced a subsidy<br>program targeting 1.8 million poor people in 11 provincial capitals<br>that would include bus passes for workers, students, and the elderly.<br>Urban transport vouchers were introduced in 2012.<br>**Compensation**: Urban public transport is reimbursed for the price<br>difference between the diesel price in effect and Mt 31<br>(US$1.03)/liter.||
|<br>Namibia<br>**Pricing policy**: A 1990 act regulates gasoline and diesel prices, and<br>Ministry of Mines and Energy (MME) announces retail prices of<br>gasoline and wholesale prices of diesel by location once a month.<br>The National Energy Fund subsidizes fuel supply to remote areas,<br>and in addition has been used to subsidize regulated fuel prices from<br>time to time.<br>**Information**: Prices of gasoline and diesel are posted on MME’s<br>|<br>**Supply**: Namibia imports petroleum<br>products from South Africa.<br>**Shortages**: LPG shortages in South Africa<br>in 2011 affected Namibia.|
|Web site every month.||
|<br>Nepal<br>**Pricing policy**: Government controls fuel prices and subsidizes<br>diesel and LPG, and at times kerosene. Prices of kerosene and diesel<br>have been equalized since Nov 2008. Kerosene, but not diesel, is<br>exempt from a VAT of 13%, a road maintenance cess of Rs 2<br>(US$0.02)/liter, and a pollution charge of Rs 0.5/liter. Protests<br>following the fuel price increases on Jan 18, 2012, forced<br>government to reduce prices on Jan 26. To make up for losses,<br>Nepal Oil Corporation (NOC), wholly owned by government,<br>introduced higher diesel prices for bulk and industrial users in Aug<br>2008 but withdrew dual pricing in Oct 2008. NOC re-introduced<br>dual pricing of diesel in Jan 2012, whereby those consuming more<br>than 4,000 liters a week are charged markedly higher unit prices. In<br>early 2011, following a government decision, NOC began providing<br>subsidized diesel to factories and hotels, offering a discount of Rs<br>1.80 (US$0.02)/liter. On Feb 12, 2013, NOC raised the price of LPG<br>by 43%, but after meeting with various student unions rolled back<br>the price increase on Feb 24, citing lack of preparation of color-<br>coded cylinders and consumer cards. Retail prices of diesel in<br>Kathmandu and benchmark FOB prices relevant to Nepal since 2007<br>are shown below. The plot shows that the largest subsidies were<br>provided in 2008.|<br> <br> <br>**Supply**: NOC is the sole importer of<br>petroleum products and Indian Oil<br>Corporation is the sole supplier to NOC.<br>Costs of supply are high because Nepal is<br>landlocked and fuel imports are trucked.<br>Cash-strapped as a result of mounting<br>losses from price control, NOC has not<br>been able to pay its bills to IOC, prompting<br>IOC to withhold delivery.<br>**Effect of hydropower on diesel demand**:<br>Hydropower shortage in 2008 forced<br>government to turn to emergency diesel<br>generation after extended load shedding.<br>The quantity of diesel imports doubled in<br>just two years between fiscal 2007/08 (Jul<br>16–Jul 15) and fiscal 2009/10.<br>**Shortages**: There are frequent fuel<br>shortages, in part because of NOC’s<br>inability to pay for fuel imports. Diesel<br>shortages prevent backup power generation<br>from running, affecting industries, but<br>rising demand for diesel for power<br>generation is one reason for diesel<br>shortages. Because diesel is subsidized, the<br>more NOC imports, the larger the loss, and<br>hence NOC cut diesel imports in 2011<br>while trying to increase gasoline imports,<br>on which NOC earns a profit. LPG imports<br>have also been curtailed to reduce NOC’s<br>losses, creating LPG shortages. Serious fuel<br>shortages began in Dec 2011, and by Feb<br>2012, lack of power, diesel (for school<br>buses), and LPG (for cooking) threatened<br>school closure. India was also facing LPG<br>shortages at the time. Black market prices<br>have been higher than officialprices as a|