Following announcements that fossil-fuel subsidies will be phased out by the G-20, the Asian-Pacific Economic Cooperation (APEC) and a number of independent countries, including Iran, Nigeria and Bahrain, Subsidy Watchwill be highlighting the most interesting news stories that touch on this theme each month...

8 January  Protestors march on the streets of Bahrain against proposed changes to government subsidies on food and fuel, despite reassurances from His Royal Highness Prime Minister Prince Khalifa bin Salman Al Khalifa that aid would increase for citizens in genuine need. Participants include representatives from 12 political organisations and trade unionists, led by Al Wefaq block MP Jawad Fairooz. They objected to not having been consulted by the government. According to newspaper reports, protestors numbered between 600 and 2,000.

11 January  According to a Financial Times article, Saudia Arabia's state oil company Saudi Aramco estimates spending of SR 30 billion (US$ 8 billion) on fuel subsidies every year, selling oil domestically for US$ 5 a barrel that would have been worth US$ 70 a barrel in 2009. This differential was even wider in 2008 when oil prices peaked at US$ 147. Due to gas shortages, power stations are currently burning oil, and analysts are said to be critical of the long-term economic benefits of the subsidy. Journalist Abeer Allam states that "phasing out subsidies, particularly for gasoline, is not on the cards [for Saudi Arabia]", though does not speculate what this means for the country's agreement as a G-20 member to phase out and rationalize fossil-fuel subsidies.

12 January  The Indonesian government decides to increase budgetary allocations to energy subsidies by 50% because of higher-than-expected oil prices, according to the Jakarta Post. This brings the subsidy budget for 2010 to a total of Rp 150 trillion (US$ 15 billion). A similar decision was taken in September 2009 when price expectations rose from US$ 60 to US$ 65 a barrel. Prices are now around US$ 80 a barrel. The Jakarta Post interprets this as the total abandonment of the government's previous policy of fuel-price flotation with monthly price adjustments.

13 January  Iran's legislative watchdog the Guardian Council gives final approval to a bill that will reform subsidies on energy, water, food, health and education, despite earlier conflict between the administration and the parliament over how the saved revenues should be spent. According to Iranian newspaper Donya-e Eqtesad, translated by Booz Allen Hamilton's Persia House, Iranians may have to wait as late as March 2011 for implementation, and not all subsidies will be reformed at the same time. It adds, "One must now sit and wait for the president's reaction to the approved law, because experience shows us that without Ahmadinejad's approval, the law's implementation is not certain."

18 January  The Malaysian Insider reports on speculation that sudden reform of Malaysia's subsidies to fuel, gas, flour and sugar, worth RM50 billion a year, could be better for the country than piecemeal reform, if savings could be accurately targeted at poor consumers. The discussion follows public criticism of government proposals to create a two-tiered pricing system for fuel oil, widely perceived as cumbersome and potentially open to abuse.

20 January  According to the Wall Street Journal, India announces plans to limit this year's subsidies to state-run fuel retailers to US$ 2.6 billion, with the finance secretary saying this marks a beginning for fuel-price reforms. The Indian Parliament's approval will be needed for the proposal to be implemented.

29 January  As reported by the Business Day, Nigeria's Minister of Petroleum Resources Rilwanu Lukman has stated to press that negotiations to deregulate the downstream oil and gas sector in Nigeria have been concluded and that the government is only waiting for the "right time" to implement reforms. Journalist Abubakar Nuhu Koko notes that consumers have been paying free-market prices since 1 November 2009, the target date originally announced by public officials for deregulation. He quotes a national average price of 100 Nigerian Naira per liter of oil (US$ 0.65 a liter), only US$ 0.05 below the average per liter price on 1 February in the United States. However, marketers still enjoy low prices for petrol sold to them by the government, support that may prove difficult to remove in the run-up to a 2011 general election.

29 January  The Indonesian Energy Ministry announces that government plans to introduce a smart-card system to restrict the sale of subsidized gasoline "will be rolled out nationwide from 2011 and will be fully operational by 2014." The Jakarta Globe reports that consumers will have to register for the smart card and there will be a daily limit on purchases of subsidized fuel, though this amount has yet to be decided.

For readers interested in keeping track of fuel-pricing developments worldwide, GTZ's monthly Fuel Price News is an invaluable resource that announces publications and events, and major fuel-pricing news stories in different regions of the world. For more information see: http://www.gtz.de/en/themen/29957.htm