GERMANY – 8-9 November 2012 – In response to growing demand for collaboration and exchange of knowledge on best practices for fuel price regulation, the German development agency GIZ and the Global Subsidies Initiative (GSI) organized a dedicated workshop “Smart Fuel Price Regulation”, held at GIZ headquarters in Eschborn, with financial support of the German Federal Ministry for Economic Cooperation and Development (BMZ).

The workshop was set up as an informal South-South dialogue, where an open discussion could take place between representatives of countries who have recently undertaken steps to reform fuel price regulation, or are planning to take such steps. Countries represented included Cape Verde, India, Kenya, Madagascar, Mexico, Mozambique, Namibia, Nigeria, South Africa and Vietnam; with international experts also contributing details on pricing regimes in Germany, Iran and Norway.

Discussions showed that many countries are challenged by regulations that are inadequate to deal with the increasing prices and volatility, incurring a significant fiscal burden during periods of high world oil prices. Further, regulations often have poor standards of transparency and enforcement, and subsidized prices disincentivize the production and use of high-quality fuels.

There was broad consensus among participants that policy reform is needed but difficult: this is a politically and socially sensitive issue, due to the possible negative impacts on vulnerable groups, as well as broader economic issues such as competitiveness of fuel-intensive industries and impacts on inflation.

Participants agreed that there is a common interest in learning from one another to identify best practice. Two issues of particular relevance were identified: first, to find out which policy measures are best for meeting a given set of objectives and how they can be implemented in practice. Second, to discover ways to mitigate the negative short-term impacts of price reform. Participants also expressed a general interest in following developments in the fuel pricing policies of peers, particularly those who export crude oil, as this can have significant implications for net importers.

A full record of discussions is not available, as the workshop was held under the Chatham House rule. It is planned that similar workshops will take place in 2013, expanding to allow for a greater number of country representatives.