Asian countries, known to have given subsidies in the past and still is, are now start to take its toll with the recent hike of oil price well above $100. Governments and state oil companies across Asia are digging deep in their pockets for $100 oil prices on behalf of consumers especially in Indonesia and Malaysia.
Most of the countries are already looking at reducing subsidy since the cost is well over budget. Or are they?
Lets look at Asian countries and how they are doing with the subsidy policy for oil.
CHINA OUTLOOK: Chinese Premier Wen Jiabao said in November there was room for further prices rises as domestic prices lagged world oil prices, but Beijing has yet to follow through.
$0.67/litre for 90-octane
RETAIL DIESEL PRICE: $0.70/litre
LAST INCREASES: 10 pct on Nov. 1 2007
RISE SINCE JAN 2003: gasoline prices by 67 pct, diesel by 71 pct.
SUBSIDY BORNE BY: Top refiner Sinopec Corp and, to a lesser degree, upstream heavyweight PetroChina.
COST OF SUBSIDY: $1.37 billion payout to Sinopec in 2005
$685 million payout to Sinopec in 2006
SUBSIDY AS PCT OF TOTAL GOVT BUDGET COSTS: 2.9 pct in 2005;
0.1 pct in 2006
TOTAL OIL DEMAND: 7.5 million bpd
INDIA OUTLOOK: India's Prime Minister Manmohan Singh said in November that India must trim its growing subsidies on food, fertiliser and fuels if it is to sustain economic growth at around 9 percent. The oil minister said on Thursday that a decision on whether to raise prices would probably be taken before the end of January.
RETAIL GASOLINE PRICE: $1.10/litre
RETAIL DIESEL PRICE: $0.77/litre
LAST INCREASES: Gasoline by 9.2 percent and diesel by 6.7 percent in June 2006
RISE SINCE JAN 2004: 29.1 percent for gasoline, 40.3 percent for diesel
SUBSIDY BORNE BY: Government, state-run upstream companies, and state-run retailers
COST OF SUBSIDY:
(a) Government through budget 26 billion rupees;
(b) Government through the issue of bonds to state oil firms 299 billion rupees;
(c) Upstream companies 231 billion rupees;
(d) State fuel retailers 170 billion rupees
* The value of the non-budget subsidy rises and falls with global crude prices. The above figures relate to a crude rate of $90
SUBSIDY AS PCT OF TOTAL GOVT BUDGET COSTS: 0.4 percent
TOTAL OIL DEMAND: 2.4 million bpd
INDONESIA OUTLOOK: The government has yet to announce how it would cope with the soaring global oil prices. It has recently scrapped plans to limit fuel for private cars.
RETAIL SUBSIDISED GASOLINE PRICE: $0.48/litre for 88-octane
RETAIL SUBSIDISED DIESEL PRICE: $0.459/litre
LAST INCREASES: 125 percent increase in October 2005
RISE SINCE JAN 2003: 148 pct for gasoline, 127 pct for diesel
SUBSIDY BORNE BY: the central government
COST OF SUBSIDY: $9.31 billion in 2007; $4.89 billion in 2008
SUBSIDY AS PCT OF TOTAL GOVT BUDGET COSTS: 12 pct
TOTAL OIL DEMAND: 660,000 bpd of subsidised fuel
MALAYSIA OUTLOOK: Prime Minister Abdullah Ahmad Badawi said on Wednesday the government would keep fuel prices unchanged for as long as it can afford. But when the time comes for prices to
be increased, the government would do so.
RETAIL GASOLINE PRICE: $0.58/litre
RETAIL DIESEL PRICE: $0.48/litre
LAST INCREASES: gasoline 18.5 pct, diesel 23.4 pct on Feb. 28, 2006
RISE SINCE JAN 2004: gasoline 40 pct, diesel 102 pct
SUBSIDY BORNE BY: government
COST OF SUBSIDY: The government spends $4.5 billion a year on fuel subsidies, comprising $2.42 billion in direct price subsidies and $2.12 billion in foregone taxes. Prime Minister Abdullah Ahmad Badawi said in November the subsidy could reach 20 billion in 2008 if there is no fuel price increases.
SUBSIDY AS PCT OF TOTAL GOVT BUDGET COSTS: 11 pct
TOTAL OIL DEMAND: 517,000 bpd
VIETNAM OUTLOOK: The government said in November 2007 it planned to stop subsidising distillates from 2008. It has eliminated subsidies on gasoline and diesel, but has not allowed local prices to rise as quickly as global ones.
RETAIL GASOLINE PRICE: $0.81/litre
RETAIL DIESEL PRICE: $0.63/litre
LAST INCREASES: 15 percent on Nov. 22
RISE SINCE JAN 2004: 167 percent for gasoline, 193 percent for diesel.
SUBSIDY BORNE BY: government
COST OF SUBSIDY: about $620 million per year
SUBSIDY AS PCT OF TOTAL GOVT BUDGET COSTS: 3 pct
TOTAL OIL DEMAND: 250,000 bpd
BANGLADESH
RETAIL GASOLINE PRICE: $0.97/litre
RETAIL DIESEL PRICE: $0.58/litre
LAST INCREASES: 21 percent in April 2
RISE SINCE JANUARY 2004: Over 100 percent for both.
SUBSIDY BORNE BY: government
COST OF SUBSIDY: about $730 million per year
TOTAL OIL DEMAND: 60,000 bpd
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