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

4 March  Bloomberg Business Week reports that the Malaysian government is to delay plans for the implementation of a new fuel-subsidy system, following the rejection of proposals to use identity cards and vehicle engine capacity to limit the purchase of subsidized fuel. The design of a new system may take until October.

7 March  Nigerian newspaper Vanguard speculates that a legal battle may be imminent between Nigeria's federal government and its 36 states, following acknowledgement in February that 872 billion Naira (US$ 5.7 billion) was taken from state accounts to finance the country's fuel subsidy between 2006 and 2009. The federal government now proposes deducting a further 476.6 billion Naira (US$ 3.1 billion). The article questions the legality of the subsidy under Nigerian law.

8 March  The Indonesian government proposes to increase the amount of money allocated to subsidies in the 2010 budget, from 157.8 trillion rupiah to 199.3 trillion rupiah (US$ 17.2-21.7 billion), according to Reuters news agency. Of this, energy subsidy spending is to rise from 106.5 trillion rupiah to 143.8 trillion rupiah (US$ 11.6-15.7 billion). Government representatives say that they do not want reductions in subsidy spending to affect economic recovery, and that they are still committed to the reduction of subsidies in the long term. This decision follows increases in subsidy spending reported in Subsidy Watch earlier this year due to higher-than-expected costs of crude oil.

9 March  Iranian President Mahmoud Ahmadinejad's 2010-11 budget is approved by parliament, including plans to phase out food and energy subsidies, reports business intelligence service MEED. According to Bloomberg Business Week, the process was not uncontroversial, with half of the proposed cuts being slashed by parliament, reducing total savings from US$ 40 billion to US$ 20 billion, due to fears over increased inflation.

12 March  According to the Jakarta Post, the Indonesian government says it is not likely to raise fuel prices this year. It is authorized to do so if global oil prices rise above US$ 84.70 per barrel, but researchers predict that they will probably fluctuate between US$ 60 and US$ 80. Commentator Fauzi Ichsan, Senior Economist at Standard Chartered bank, speculates that the government would not raise fuel prices unless global oil prices rise above US$ 100 per barrel. News website TempoInteractive reports that the government also plans to forbid the use of subsidized fuel for private vehicles, on the basis that spending is hard to control and the subsidy is intended to benefit the poor.

16 March  According to news website World Bulletin, Iran's budget for next year, which includes cuts to subsidies, has been approved by the Guardian Council. This is the final hurdle in Iran's political system before decisions can become law. The article reports that plans to phase out subsidies to food and energy were due to begin 21 March.

19 March  In an interview on state television, Iranian President Mahmoud Ahmadinejad further complicates the process of subsidy reform by proposing to hold a referendum on the issue, reports Reuters news agency. He is said to have argued that the people should be asked their opinion, given controversy over its possible impacts. Nonetheless, The Inside News Hyderabad also reports the President describing the subsidy bill as a "necessary reform". The Los Angeles Times reports that the purpose of the referendum would be to seek approval to cut an additional US$ 20 billion on top of the US$ 20 billion already approved by parliament. The President's announcement follows months of conflict between the government and parliament over who will control the liberated spending and the total amount of cuts.

23 March  Indonesia's Minister of Mines and Energy announces that Indonesia may seek to eliminate electricity and fuel subsidies by 2014-2015, according to Reuters news agency. Apparently, this is the first time the government has set out a timeline for reform. Reuters state that the subsidies are seen to be one of the main barriers to Indonesia receiving an investment-grade credit rating.

25 March  Radio Free Europe reports that Iran's Supreme Leader, Ayatollah Ali Khamenei, has instructed the government and parliament to honour the plan passed by parliament at the same time as taking into account the government's concerns while it is carried out. They report that this is widely understood as approval of parliament's plan.
 
5 April  Reuters and Radio Free Europe report that Iranian President Mahmoud Ahmadinejad has sent a letter to parliament calling for review of their decision to cut subsidy spending by US$ 20 billion, instead of the US$ 40 billion the government had proposed.

9 April  According to The Hindu newspaper, Indian Finance Minister Pranab Mukherjee asks the country's Comptroller and Auditor General (CAG) to suggest ways to control the rising cost of food, fertilizer and petroleum product subsidies, in ways that will not harm the populations targeted by these policies. He also asked the CAG to report on the effectiveness of expenditure intended to promote development "at the grassroots level".

10 April  Ethiopia's Ministry of Trade and Industry announce that they will adjust the local fuel price due to surges in international prices, reports Ethiopian News. The article reports that fuel accounts for 20% of Ethiopia's total cost of imports.

13 April  The Sierra Club publishes a study highlighting the United States' coal subsidies that are not yet in line with the country's G-20 pledges, reports subsidy research organisation Earth Track. The four primary areas where federal finances continue to subsidize coal include contributions to international development organisations that support fossil fuel use and extraction, as well as tax-exempt and subsidized bonds, tax credits and government-guaranteed loans.

19 April  A World Bank report concludes that Indonesia must eliminate fuel subsidies for its energy sector to be efficient, sustainable and secure, reports blog Wild Singapore News. The study, called Winds of Change: East Asia's Sustainable Energy Future, also looks at India, China, the Philippines, Malaysia, Thailand and Vietnam. It finds that energy subsidies intended to protect the poor largely end up benefiting the rich, and that the region needs an additional US$ 80 billion of investment per year in sustainable energy.

21 April  The Global Subsidies Initiative launches a series of reports about fossil fuel subsidies and their reform, Untold Billions: Fossil-Fuel subsidies, their impacts and the path to reform, in anticipation of the G-20 Finance Ministers' meeting in Washington D.C on 23 April. The reports include research into the effects of fossil-fuel subsidies, their political economy, lessons learnt from previous attempts at their reform and the increased transparency of data about fossil-fuel subsidies. A fifth, forthcoming report will include research on mapping fossil-fuel subsidies.

22 April  Evita Legowo, Director General of Oil and Gas at the Indonesian Ministry of Energy, announces that the government aims to cut subsidies 40% by 2014, reports the Jakarta Globe. Under a new plan, only public transport and vehicles manufactured before the year 2000 would be allowed to use subsidized fuel. Commentators have expressed scepticism that it will be possible to implement the scheme by 2011, the time-frame laid out by the goverment.

27 April  Ruling party officials in Egypt have expressed concern about increases in subsidy spending on petroleum products, given the country's budget deficit. According to Egypt.com News, subsidies are reported to be 43% higher than originally intended this fiscal year: from 33 billion to 59 billion Egyptian pounds (US$ 5.9-10.5 billion). Egypt's Finance Minister Youssef Boutros-Ghali has estimated the fiscal deficit will increase by 8 billion Egyptian pounds (US$ 1.4 billion).
 
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