## gcc-energy-pricing-reforms

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---

### Executive summary: overview and motivation
- Regulating energy prices supports well-being and economic development by keeping domestic energy prices relatively low and stable despite global price volatility.
- In Arab countries, domestic energy prices are among the lowest in the world.
- Paper examines:
  - energy-price regulation, the “right” price level and pricing regime;
  - impact of subsidy removal on growth and public debt;
  - lessons from reform episodes.
- Scope:
  - Oil exporters: Algeria, Iraq, GCC countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates).
  - Oil importers: Djibouti, Egypt, Jordan, Lebanon, Mauritania, Morocco, Sudan and Tunisia.
  - Libya, Syria and Yemen excluded owing to lack of information.

### Costs and unintended consequences of low energy prices
- Low energy prices:
  - encourage wasteful and excessive consumption and inhibit energy efficiency;
  - discourage investment in the energy sector, locking in inefficient technologies;
  - result in explicit or implicit subsidies that erode fiscal space;
  - are regressive and tend to benefit wealthier people more than the poor;
  - can feed smuggling when sharp price differences exist across borders;
  - create a lock-in effect via distorted investment in inefficient transportation, buildings, and industrial infrastructure.
- Arab countries are dependent on oil and natural gas for 95 percent of their domestic energy needs.
- Arab oil-exporting countries have energy intensity well above the global trend based on per capita income, and their energy intensity is rising over time.

### Opportunity for reform in the current low oil price environment
- Low oil prices reduce the price gap (domestic vs international), lowering the size of required adjustment and creating a window for reform.
- For oil exporters, low oil prices raise fiscal urgency to reform because budget and external positions are weaker.
- Recent actions:
  - All Arab oil exporters have raised domestic prices, many committing to future reforms.
  - Arab oil importers have reduced price gaps to varying degrees via full indexation or ad hoc adjustments.
  - Ad hoc price adjustments, particularly for natural gas and electricity, have been the instrument of choice.

### Measuring subsidies: Price-Gap Approach (Box 1)
- Methodology:
  - Estimates subsidies as the difference between the market price and an assumed reference price, multiplied by consumption.
  - Reference price: benchmark/international price adjusted for transportation and distribution costs (for importers).
  - When price gaps are negative (domestic prices higher than reference prices), subsidies are set to zero.
  - Subsidies defined as "pre-tax subsidies" (not including efficient taxation and externalities).
- Data and assumptions used:
  - Retail prices: provided by IMF country desks, based on country authorities’ inputs.
  - Transportation costs: assumed constant at US$ 0.20 per liter (Coady, Parry, Sears, and Chang, 2015).
  - Reference prices:
    - US retail prices (U.S. Department of Energy) for gasoline and diesel.
    - Henry Hub spot price for natural gas.
    - US tariffs (U.S. Department of Energy) for electricity.
    - Taxes are excluded from reference prices.
  - Energy consumption: available until 2012 from IEA; for 2013 onwards estimated using the growth rate of countries’ (non-oil) real GDP.
  - Coverage: regular gasoline, diesel, kerosene, electricity, natural gas (unless otherwise noted).

### Key quantitative findings (2015 and related)
- Global energy subsidies in 2015: $436 billion.
- Arab countries accounted for more than a quarter of global energy subsidies in 2015: $117 billion out of $436 billion.
- Arab oil exporters accounted for $94 billion of the Arab total (about 5½ percent of their GDP).
- Kerosene subsidies represent 3½ percent of total petroleum subsidies in Arab countries.
- Petroleum product subsidies account on average for about 65 percent of total energy subsidies in Arab countries.
- Energy subsidy levels may differ from country authorities' estimates due to use of different reference prices.

### Fiscal, economic, external, environmental, and distributional implications
- Fiscal costs arise via:
  - explicit subsidies driving expenditures up;
  - implicit subsidies causing foregone revenue or reduced profits (or losses) for state-owned energy-related enterprises.
- Low prices can reduce government take from export- and consumption-related taxes and can increase deficits and debt—leading to higher interest rates and higher debt burden.
- Subsidies often subtract from other productive expenditures (infrastructure, health, education, pro-poor spending).
  - In Arab oil-exporting countries, energy subsidies tend to be higher than spending on health and education.
  - In oil-importing countries, subsidies can be higher than investment.
- External/environmental:
  - Overconsumption may worsen balance of payments via higher imports (importers) or lower exports (exporters).
  - Low prices may promote smuggling and excessive automobile use, contributing to pollution, road erosion, and higher traffic accidents.
  - Arab countries are among the largest GHG emitters in per capita terms, especially GCC oil exporters (per capita GHG emissions, 2014 shown in source figures).
- Distributional:
  - Energy subsidies are relatively regressive.
  - Example: authorities report the top 20 percent receive 60 percent of the energy subsidies in Egypt.
  - For gasoline and diesel, the top quintile benefits from more than 50 percent of the subsidies; kerosene is an exception (poorest consume most kerosene).
  - Average subsidy distribution computed for Egypt, Jordan, Lebanon, Mauritania, and Morocco (data 2003–2010) shown in source figures.

### Timing and incentives for reform
- Balance of incentives depends on international oil prices (adapted from Fattouh and Sen, 2015):
  - Oil exporters:
    - High oil prices: Fiscal urgency Low, Economic cost High, Political cost High.
    - Low oil prices: Fiscal urgency High, Economic cost Low, Political cost Lower.
  - Oil importers:
    - High oil prices: Fiscal urgency High, Economic cost High, Political cost Possibly high.
    - Low oil prices: Fiscal urgency Low, Economic cost Low, Political cost Possibly low.
- Low oil-price environment can provide a window to pursue reform, especially for importers; for exporters, low prices increase fiscal urgency.

### International experience: five broad lessons for successful reform
- Formulate an integrated reform strategy:
  - Align energy prices to market/cost recovery levels.
  - Create incentives to reduce energy intensity and inefficiency.
  - Provide support for consumers and producers that stand to lose.
  - Pace and scope of reform calibrated to administrative capacity and institutions.
- Protect the most vulnerable:
  - Compensating measures should ideally include targeted cash transfers; universal cash transfers may be easier to implement in practice.
  - Cash measures are preferable to in-kind compensation.
- Build broad public support:
  - Communicate costs and benefits clearly; careful consultations needed to create buy-in.
- Refrain from ad hoc adjustments that do not address the root problem:
  - Transparent and simple formulas to adjust prices are more conducive to sustainable reform.
  - Automatic price mechanisms can depoliticize reform, help avoid reversal, and facilitate transition to fully liberalized pricing.
- Move gradually when feasible:
  - One-off large adjustments can provoke public discontent and risk reversal.
  - Gradual adjustments allow time to adjust; large and sudden adjustments may be unavoidable under large fiscal pressures.

### Petroleum prices and pricing gaps (Box 2): regimes, trends, and macro benefits
- Pricing regimes and recent moves:
  - Out of 16 Arab countries covered, 11 have ad hoc pricing regimes.
  - Two oil importers (Lebanon and Morocco) fully liberalized petroleum product prices (market-based).
  - Jordan adopted a formula-based system.
  - Oman and the UAE adopted formula-based pricing regimes; Qatar introduced a formula but its application is not automatic.
- Petroleum price adjustment regimes, 2016 (count of countries):
  - No/Ad-hoc Adjustment: 11
  - Formula-based Price: 1
  - Market-based Price: 1
- Petroleum subsidy aggregates (percent of GDP), 2013 vs 2016:
  - Oil Exporters: 2013 = 7.0; 2016 = 3.5; Change = -3.5
  - Oil Importers: 2013 = 6.3; 2016 = 2.9; Change = -3.4
- Selected country petroleum subsidy figures (2013; 2016; change) — (In Percent of GDP):
  - Algeria: 8.5; 5.3; -3.2
  - Bahrain: 6.9; 3.8; -3.1
  - Iraq: 7.7; 2.2; -5.5
  - Kuwait: 7.3; 6.8; -0.5
  - Oman: 7.4; 3.0; -4.4
  - Qatar: 5.1; 3.8; -1.3
  - Saudi Arabia: 9.4; 4.4; -5.0
  - UAE: 2.0; 0.7; -1.3
  - Djibouti: 0.; 0.4; 0.0
  - Egypt: 10.0; 4.1; -5.9
  - Jordan: 3.3; 1.6; -1.8
  - Lebanon: 5.9; 6.7; 0.8
  - Mauritania: 0.7; 1.0; 0.3
  - Morocco: 1.0; 0.2; -0.9
  - Sudan: 2.7; 0.0; -2.7
  - Tunisia: 4.6; 2.8; -1.8
- Notes:
  - Energy subsidies include regular gasoline, diesel, kerosene, natural gas, and electricity.
  - Excludes Libya, Syria, and Yemen.
  - Recent subsidy declines largely reflect decline in international benchmark prices rather than domestic price increases.

### Macroeconomic scenarios from removing petroleum price gaps (Box 3 scenarios)
- Rationale: Removing regulated-price subsidies frees resources for investment, social safety nets, or debt repayment; if sustained, benefits accumulate.
- Scenario 1 — Redirecting subsidies into productive investment:
  - Assumes multiplier value of 0.35 (difference between an investment multiplier and a current consumption multiplier).
  - Produces a cumulative growth dividend of about 2 percentage points over six years for every percentage point of GDP in reduced subsidies.
  - Example: a country spending 3 percent of GDP in subsidies would see a cumulative 6 percentage points of additional growth if energy subsidies were eliminated.
- Scenario 2 — Redirecting subsidies to pay down public debt (or reduce fiscal deficit) from 2016 onwards:
  - Every percentage point of GDP of subsidies used for this purpose could generate savings of between 4.5-6.3 percentage points of GDP over the next six years, depending on interest rates and projected GDP trends.
  - Example: a country spending 3 percent of GDP a year on subsidies could see debt reduction of as much as 20 percentage points of GDP cumulatively after 6 years.

### Recent reforms and persistence of discretionary pricing
- All Arab oil exporters have recently increased domestic energy prices (petroleum products, natural gas, or electricity).
- Examples of country actions:
  - GCC adjustments starting in 2015 ranged from total elimination of fuel price gaps relative to opportunity cost (UAE) to sharp increases with sizable gaps remaining (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia).
  - Algeria increased tax rates on gasoline and diesel in 2016 and 2017 and increased the VAT rate by 2 percentage points.
  - Oman planned electricity tariff increases for government and large commercial/industrial users in 2017 (authorities estimate these increases should reduce consumption by 20 percent).
  - Iraq increased electricity tariffs in early 2015 (increasing cost recovery coverage from 10 percent to 50 percent).
  - Morocco and Jordan eliminated fuel subsidies using local price adjustments rather than relying on lower international oil prices.
  - Egypt, Sudan, and Tunisia implemented ad hoc discretionary local price changes but refrained from full indexation.
  - Jordan phased out electricity or natural gas subsidies completely (with some cross-subsidies remaining in electricity); fuel prices were fully liberalized in 2015.
- Despite reforms, most Arab countries still follow discretionary price setting mechanisms:
  - Electricity prices most closely managed, followed by natural gas; petroleum prices show most progress toward market/formula-based regimes.

### Country experiences and sequencing: empirical lessons
- Broad finding: Reform success depends on preparation, equitable implementation, clear communication, depoliticization of pricing, and gradual implementation.
- Key empirical context:
  - Explicit fuel subsidies rose from 2.5 percent of GDP in 2000 to 6.5 percent of GDP in 2012 (while the fiscal deficit had increased to 7 percent of GDP).
- Selected country cases:
  - Jordan — move gradually & generate buy-in:
    - By 2005 explicit fuel subsidies approached almost 6 percent of GDP.
    - General fuel price subsidies removed in November 2012; monthly fuel price adjustment reinstituted in early 2013; electricity tariffs increased three times since 2013.
    - Mitigation: public sector wage and pension increases for low-income; compensatory cash transfers of $100 per person for families with income below $1,130 a month (70 percent of population) if oil price is above $100 per barrel; upgraded food subsidy program.
    - Wage increases benefited some 60 percent of population; mitigation program cost an estimated 7 percent of GDP (World Energy Forum, 2013).
  - Ghana — good preparations are not enough if political will is wavering:
    - Automatic price adjustment formula adopted in 2005 but suspended prior to elections; mechanism proved fragile and subsidies re-emerged.
  - Iran — frontload compensating measures:
    - 2010 reform increased domestic fuel prices by 400-1,000 percent with universal unconditional transfers to almost all 75 million citizens.
    - Operational challenges: banks opened some 16 million new accounts; later fiscal pressures and inflation eroded transfer value; program required additional budgetary support.
    - Lessons: universal transfers can enable bold increases but require monetary/fiscal policies to anchor inflation and transfers that move with inflation.
  - Bolivia — avoid abrupt price increases:
    - 2010 fuel price increase of 80 percent after six-year freeze provoked mass protests and revocation.
  - Nigeria — weak institutions undermined confidence:
    - 2011 subsidies estimated at 1.9 percent of GDP (US$8 billion); January 2012 abrupt end to subsidy doubled gasoline prices overnight, triggering violent protests and partial reinstatement.

### Do’s and Don’ts for Arab countries (distilled recommendations)
- Think broadly:
  - Reform as part of a comprehensive strategy promoting energy efficiency, aligning prices to market/cost recovery, and sequencing reforms to administrative capacity.
- Be inclusive — protect the poor and indirectly affected groups:
  - Preferred instruments: targeted cash transfers or vouchers; universal cash transfers may be used if targeting capacity is lacking but risk outstripping savings.
  - Enrollment-based approaches can reduce leakage by making participation inconvenient for wealthier households.
  - For electricity, lifeline tariffs for low-consumption households are an option.
  - Cash transfers generally preferred over in-kind compensation to avoid distortions and corruption.
  - Examples: Direct Benefit Transfer (DBT) in India to replace subsidized LPG cylinders with cash transfers into bank accounts linked to single LPG connection.
  - Other options: public works, expansion of education and health programs, assistance to switch to cheaper energy sources, training for displaced workers.
- Build public & political support:
  - Broad consultation and advance communication; introduce compensatory transfers before price changes to improve acceptance.
- Depoliticize the process:
  - Use transparent formula-based approaches or full liberalization rather than discretionary price fixing; automatic adjustments help avoid reversals.
- Move gradually:
  - Avoid abrupt, large price increases when feasible; gradual reforms reduce risk of reversal and allow adjustment time.

### Formula-based adjustment in petroleum prices (Box 4 — illustrative scenarios)
- Mechanism:
  - Reduce the prevailing price gap each period by a pre-determined percentage until domestic price equals reference (international) price; then move to full market liberalization.
  - Advantages: tailor pace to circumstances; transparent continuous re-evaluation.
- Example 1 (Bahrain):
  - Early 2016: gasoline increased from US$0.2 per liter to US$0.33 in a one-off adjustment.
  - Counter-factual: same adjustment spread over sixteen months under a formula-based approach could have positioned Bahrain to remove subsidies by 2018.
- Example 2 (Lebanon):
  - Lebanon’s diesel price remained below the reference price.
  - Hypothetical: gradual adjustment over three years could reach the current reference price before shifting to market-based pricing.
- Data notes:
  - Actual prices provided by IMF country desks based on country authorities’ inputs.
  - Reference prices from IEA data on gasoline/diesel prices for the US, minus any taxes; forecasts use most recent WEO projections for oil price changes.

_Italic: Source — EXECUTIVE SUMMARY, Box 1, Box 2, and subsequent chapters and annexes of "gcc-energy-pricing-reforms" (PDF chapter/section)._

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Overview
- Regulating energy prices is common worldwide to support well-being and economic development by keeping domestic energy prices relatively low and stable despite global price volatility.
- In Arab countries, domestic energy prices are among the lowest in the world.
- The paper examines energy-price regulation, the “right” price level and pricing regime, the impact of subsidy removal on growth and public debt, and lessons from reform episodes.

### Costs and unintended consequences of low energy prices
- Low energy prices encourage wasteful and excessive consumption and inhibit energy efficiency.
- Low prices discourage investment in the energy sector, locking in inefficient technologies and affecting energy production.
- Low energy prices result in subsidies—explicit or implicit—that erode fiscal space.
- Low energy prices are regressive and tend to benefit wealthier people more than the poor.
- Low prices can feed smuggling across borders when sharp price differences exist between neighboring countries.
- Distorted investment in inefficient transportation, buildings, and industrial infrastructure creates a lock-in effect that makes it difficult to reduce energy intensity in the future.
- Arab countries are dependent on oil and natural gas for 95 percent of their domestic energy needs.
- Arab oil-exporting countries have energy intensity well above the global trend based on per capita income, and their energy intensity is rising over time.

### Opportunity for reform in the current low oil price environment
- The current environment of low oil prices offers an opportunity for reform because the price gap—the difference between domestic prices and international benchmarks—is smaller, reducing the size of the required adjustment.
- When oil prices are low, oil exporters feel greater urgency to reform because their budget and external positions are weaker.
- Many Arab countries have taken encouraging steps to reform energy prices in the current low oil price environment:
  - All Arab oil exporters have raised domestic prices, with many committing to future reforms.
  - Arab oil importers have reduced price gaps to varying degrees, either through full indexation or ad hoc adjustments.
  - Overall, ad hoc price adjustments, particularly for non-petroleum products such as natural gas and electricity, have been the instrument of choice.

### Challenges in measuring subsidies
- Subsidies are often implicit and can be hard to measure because calculation requires comparing effective domestic prices with suitable benchmarks (opportunity cost or cost recovery).
- A commonly used method is the Price Gap Approach, which evaluates subsidies based on actual consumption levels and international trade prices.

### International experience: five broad lessons for successful reform
- Formulate an integrated reform strategy:
  - Align energy prices to market/cost recovery levels.
  - Create incentives to reduce energy intensity and inefficiency.
  - Provide support for consumers and producers that stand to lose.
  - Pace and scope of reform should be calibrated to countries’ administrative capacity and institutional framework.
- Protect the most vulnerable:
  - Compensating measures should ideally include targeted cash transfers, though universal cash transfers may be easier to implement in practice.
  - Experience suggests cash measures are preferable to in-kind compensation.
- Build broad public support:
  - The public needs to be made well aware of the costs and benefits of energy price subsidies.
  - Careful consultations and/or clear communication are needed to create buy-in for reform.
- Refrain from ad hoc adjustments that do not address the root of the problem:
  - Transparent and simple formulas to adjust prices are more conducive to successful and sustainable reform.
  - Ad hoc, one-time adjustments do not provide a lasting solution as prices continue to change.
  - Automatic price mechanisms can depoliticize the reform process, help avoid reform reversal, and facilitate the transition to a fully liberalized pricing system.
- Move gradually when feasible:
  - One-off adjustments are often large and can lead to popular discontent and political cost, risking reform reversal.
  - Gradual adjustments allow consumers and businesses to adjust to higher and more volatile energy prices.
  - Large and sudden adjustments can be unavoidable when countries face large fiscal adjustments.

### Motivation and scope
- Low energy prices have helped achieve economic, political, and social objectives, but create inefficiencies with significant economic and budgetary costs and distributional inequities.
- The paper covers the following countries:
  - Oil exporters: Algeria, Iraq, GCC countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates).
  - Oil importers: Djibouti, Egypt, Jordan, Lebanon, Mauritania, Morocco, Sudan and Tunisia.
  - Libya, Syria and Yemen are excluded owing to lack of information.

_Italic: Source — EXECUTIVE SUMMARY, "gcc-energy-pricing-reforms - EXECUTIVE SUMMARY"_

### Box 1. Price-Gap Approach to Measuring Subsidies

### Box 1. Price-Gap Approach to Measuring Subsidies

### Price-gap methodology
- The price-gap approach estimates energy subsidies as the difference between the market price and an assumed reference price, multiplied by consumption.
- The reference price is usually a benchmark/international price, adjusted for transportation and distribution costs (for oil importing countries).
- Advantage: simplicity and clarity; drawback: involves judgment (e.g., estimates for transport and distribution costs).
- Starting equation (as presented in source):
  - ݁ܿ݅ݎܲ	݈݅ܽݐܴ݁െ	ݏݐݏ݋ܥ	݊݋݅ݐܽݐݎ݋݌ݏ݊ܽݎܶ	൅݁ܿ݅ݎܲ	݁ܿ݊݁ݎ݂ܴ݁݁	ൌ	݌ܽܩ	݁ܿ݅ݎܲ
- Derived total subsidy (as presented in source):
  - ݊݋݅ݐ݌݉ݑݏ݊݋ܥ∗݌ܽܩ	݁ܿ݅ݎܲൌݕ݀݅ݏܾݑܵ
- Under this approach, when price gaps are negative (domestic prices higher than reference prices), subsidies are set to zero.
- Clarification: subsidies defined here are "pre-tax subsidies" (as opposed to post-tax subsidies, which include an adjustment for efficient taxation and externalities).

### Data sources and assumptions used in the paper
- Retail prices: provided by IMF country desks, based on country authorities’ inputs.
- Transportation costs: assumed constant at US$ 0.20 per liter (Coady, Parry, Sears, and Chang, 2015).
- Reference prices:
  - US retail prices (U.S. Department of Energy) for gasoline and diesel.
  - Henry Hub spot price for natural gas.
  - US tariffs (U.S. Department of Energy) for electricity.
  - Taxes are excluded from reference prices.
- Energy consumption:
  - Available until 2012 from IEA.
  - For 2013 onwards, consumption is estimated using the growth rate of countries’ (non-oil) real GDP.
- Coverage: petroleum products (regular gasoline, diesel, kerosene), electricity, and natural gas (unless otherwise noted).

### Key quantitative findings (2015 and related)
- Global energy subsidies in 2015: $436 billion (world-wide).
- Arab countries accounted for more than a quarter of global energy subsidies in 2015: $117 billion out of $436 billion.
- Arab oil exporters accounted for $94 billion of the Arab total (about 5½ percent of their GDP).
- Kerosene subsidies represent 3½ percent of total petroleum subsidies in Arab countries.
- Example transport cost assumption reiterated: US$ 0.20 per liter.

### Fiscal, economic, and budgetary implications
- Fiscal costs arise through:
  - Explicit subsidies driving expenditures up.
  - Implicit subsidies causing foregone revenue or reduced profits (or losses) for state-owned energy-related enterprises.
- Low prices can reduce government take from export- and consumption-related taxes and can increase deficits and debt—leading to higher interest rates and higher debt burden.
- Petroleum product subsidies account on average for about 65 percent of total energy subsidies in Arab countries (results vary by country).
- A gradual recovery in oil prices could lead to a return of higher petroleum subsidies over time absent price reform.
- Subsidies often subtract from other potentially more productive expenditures (infrastructure, health, education, pro-poor spending).
  - In Arab oil-exporting countries, energy subsidies tend to be higher than spending on health and education.
  - In oil-importing countries, subsidies can be higher than investment.

### External and environmental implications
- Subsidies and overconsumption may worsen the balance of payments via higher energy imports (importers) or lower exports (exporters).
- Low energy prices may promote smuggling, causing export revenue losses.
- Low prices promote excessive automobile use, contributing to pollution, road erosion, and higher traffic accidents.
- Arab countries are among the largest greenhouse gas (GHG) emitters in per capita terms, especially GCC oil exporters (per capita GHG emissions, 2014, shown in source figures).

### Distributional effects
- Energy subsidies are relatively regressive: largest benefits accrue to richer segments rather than the poorest (Clements et al, 2013; Sdralevich et al, 2014).
- Example: authorities report the top 20 percent receive 60 percent of the energy subsidies in Egypt.
- For gasoline and diesel, the top quintile benefits from more than 50 percent of the subsidies; kerosene is an exception (poorest consume most kerosene).
- Average subsidy distribution computed for Egypt, Jordan, Lebanon, Mauritania, and Morocco (data collected between 2003 and 2010) shown in source figures.

### Timing and incentives for reform
- The balance of incentives for reform depends on prevailing international oil prices (adapted from Fattouh and Sen, 2015):
  - Oil exporters:
    - High oil prices: Fiscal urgency Low, Economic cost High, Political cost High.
    - Low oil prices: Fiscal urgency High, Economic cost Low, Political cost Lower.
  - Oil importers:
    - High oil prices: Fiscal urgency High, Economic cost High, Political cost Possibly high.
    - Low oil prices: Fiscal urgency Low, Economic cost Low, Political cost Possibly low.
- Low oil-price environment can provide a window to pursue reform (Ladislaw and Cuyler, 2015), especially for importers; for exporters, low prices increase fiscal urgency.

### Recent reforms and country actions (summary as presented)
- All Arab oil exporters have recently increased domestic energy prices (petroleum products, natural gas, or electricity).
  - GCC adjustments starting in 2015 ranged from total elimination of fuel price gaps relative to opportunity cost (UAE) to sharp increases with sizable gaps remaining (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia).
  - Algeria increased tax rates on gasoline and diesel in 2016 and 2017 and increased the VAT rate by 2 percentage points.
  - Electricity tariff increases in most GCC countries (Bahrain, Kuwait, Qatar, Saudi Arabia, UAE); Oman planned electricity tariff increases for government and large commercial/industrial users in 2017 (authorities estimate these increases should reduce consumption by 20 percent).
  - Iraq increased electricity tariffs in early 2015 (increasing cost recovery coverage from 10 percent to 50 percent).
- Oil importers have also implemented substantial adjustments:
  - Morocco and Jordan eliminated fuel subsidies using local price adjustments rather than relying on lower international oil prices.
  - Egypt, Sudan, and Tunisia implemented ad hoc discretionary local price changes but refrained from full indexation to global prices.
  - Jordan phased out electricity or natural gas subsidies completely (with some cross-subsidies remaining in electricity).
  - Egypt adjusted electricity and gas in 2013–15 and plans further tariff increases over the next five years.
  - Tunisia allowed one-off tariff rate increases in 2012 and 2013.

### Persistence of discretionary pricing regimes
- Despite reforms, most Arab countries still follow discretionary price setting mechanisms:
  - Electricity prices are most closely managed, followed by natural gas.
  - Petroleum prices show most progress: some oil-importers have market-based or formula-based pricing (Lebanon and Morocco market-based; Jordan formula-based); among oil-exporters, Oman and the UAE switched to automatic pricing formulas.
- Energy price adjustment regimes in 2016 (as shown in source figures) include categories: No Adjustment, Ad-hoc Adjustment, Formula-based Price, Market-based Price (percent of countries by fuel type).

*Source: Box 1. Price-Gap Approach to Measuring Subsidies, gcc-energy-pricing-reforms - Box 1. Price-Gap Approach to Measuring Subsidies*

### Box 2. A Closer Look at Petroleum Prices and Pricing Gaps

### Box 2. A Closer Look at Petroleum Prices and Pricing Gaps

### Petroleum pricing regimes: coverage and recent moves
- Out of the 16 Arab countries covered in this paper, 11 have ad hoc pricing regimes (though some have implemented discretionary price increases).
- Only two oil importers (Lebanon and Morocco) have fully liberalized petroleum product prices and follow market-based systems.
- Jordan has adopted a formula-based system.
- Among oil exporters, two (Oman and the UAE) have recently adopted formula-based pricing regimes.
- Qatar has also introduced a formula, though its application is not automatic.

### Pricing gaps, recent evolution, and drivers
- Pricing gaps remain because the majority of Arab countries do not follow automatic pricing of domestic petroleum products, and they are at risk of rebounding if world prices rise.
- Although petroleum price gaps are now much below earlier levels—between 2013 and 2016, subsidies declined by close to 3 percent of GDP—the bulk of the reduction is accounted for by the decline in world prices.
- Most countries’ price gaps have been exogenously reduced, but such reductions may not last over time.

### Petroleum Price Adjustment Regimes, 2016 (count of countries)
- No/Ad-hoc Adjustment: 11
- Formula-based Price: 1
- Market-based Price: 1
- (Breakdown shown separately for Oil Exporters and Oil Importers in source)

### Petroleum price subsidies, 2013–16 (percent of GDP) — aggregate and by country
- Aggregate changes, 2013–2016:
  - Oil Exporters: 2013 = 7.0; 2016 = 3.5; Change = -3.5
  - Oil Importers: 2013 = 6.3; 2016 = 2.9; Change = -3.4
- Selected country figures (2013, 2016, change) — (In Percent of GDP):
  - Algeria: 8.5; 5.3; -3.2
  - Bahrain: 6.9; 3.8; -3.1
  - Iraq: 7.7; 2.2; -5.5
  - Kuwait: 7.3; 6.8; -0.5
  - Oman: 7.4; 3.0; -4.4
  - Qatar: 5.1; 3.8; -1.3
  - Saudi Arabia: 9.4; 4.4; -5.0
  - UAE: 2.0; 0.7; -1.3
  - Djibouti: 0.; 0.4; 0.0
  - Egypt: 10.0; 4.1; -5.9
  - Jordan: 3.3; 1.6; -1.8
  - Lebanon: 5.9; 6.7; 0.8
  - Mauritania: 0.7; 1.0; 0.3
  - Morocco: 1.0; 0.2; -0.9
  - Sudan: 2.7; 0.0; -2.7
  - Tunisia: 4.6; 2.8; -1.8
- Notes from source:
  - Energy subsidies include regular gasoline, diesel, kerosene, natural gas, and electricity.
  - Excludes Libya, Syria, and Yemen.
  - Energy subsidy levels may differ from country authorities' estimates due to the use of a different reference price.

### Country-level observations and distributional implications
- Among oil exporters, the UAE stands out for its low level of subsidies. In all the others, subsidies remain large despite recent declines.
- Recent domestic price increases have not been a major contributor to the decline in energy price gaps; the decline in benchmark international prices accounts for much of the reduction.
- Among oil importers, Jordan and Morocco have benefited from more flexible petroleum pricing.
- While petroleum subsidies in Lebanon are very small, electricity subsidies are sizable as electricity tariffs have not been adjusted in over a decade.
- Inequality context and potential spillovers:
  - Arab countries have inequality levels (as measured by the Gini index) broadly in line with world averages (around 38).
  - Energy subsidies are large and regressive, so energy price reforms could help address inequalities.
  - Applying results from Berg, Ostry and Tsangarides (2008) and assuming a reduction in the Gini coefficient of 2.5 points, positive growth periods could be increased from an average of 5½ years to 6½ years.

### Macroeconomic benefits from removing price gaps (Box 3 scenarios)
- Rationale:
  - Removing regulated-price subsidies frees resources otherwise earmarked for explicit subsidies or representing foregone revenue. These resources can be used to increase investment, expand social safety nets, or pay back public debt.
  - If subsidy removal is sustained (for example by linking domestic prices to international ones via full price liberalization or an automatic price formula), benefits accumulate over time.
- Scenario 1: Redirecting subsidies into productive investment
  - Assumes a conservative multiplier value of 0.35 (the difference between an investment multiplier and a current consumption multiplier).
  - Produces a cumulative growth dividend of about 2 percentage points over six years for every percentage point of GDP in reduced subsidies.
  - For a country that annually spends 3 percent of GDP in subsidies, the dividend would be a cumulative 6 percentage points of additional growth if energy subsidies were eliminated.
- Scenario 2: Redirecting subsidies to pay down public debt (or reduce fiscal deficit) from 2016 onwards
  - Every percentage point of GDP of subsidies used for this purpose could generate savings of between 4.5-6.3 percentage points of GDP over the next six years, depending on interest rates and projected GDP trends.
  - For a country that spends 3 percent of GDP a year on subsidies, savings may result in debt reduction of as much as 20 percentage points of GDP cumulatively after 6 years.
  - The associated reduction in debt service costs could be used to mitigate the impact of withdrawing subsidies or for other productive spending programs.

### Reform strategy: feasibility and international experience
- Energy price reform is difficult but feasible. Experience shows many countries partially implement or abandon reforms: out of 28 reform episodes examined in cited literature, 12 were classified as a success, 11 partially or fully lost earlier reform gains, and 5 did not succeed.
- Key elements that make reforms successful emerge from international case studies (seven cases summarized in source).
- Illustrative country lessons:
  - Malaysia: Move slowly & adopt price formula to avoid politicization.
    - Reform planning began in 2010 over a 3 to 5-year period as part of the 10th Malaysia Plan (2010-15).
    - Fuel prices began to rise in late-2010; diesel and gas were floated in 2015.
  - Morocco: Consult extensively & plan well.
    - In the late 2000s Morocco implemented a fixed price fuel subsidy program and used cross-taxes (taxing super and diesel to subsidize butane) to limit regressivity, though regressivity remained and fiscal cost rose as oil prices increased.

*Source: Box 2. A Closer Look at Petroleum Prices and Pricing Gaps, gcc-energy-pricing-reforms - Box 2. A Closer Look at Petroleum Prices and Pricing Gaps.*

### 2.5 percent of GDP in 2000 to 6.5 percent of GDP in 2012 (while the fiscal deficit had increased

### gcc-energy-pricing-reforms - 2.5 percent of GDP in 2000 to 6.5 percent of GDP in 2012 (while the fiscal deficit had increased

### Summary of country experiences and reform sequencing
- Broad finding: Reform success depends on proper preparation, equitable implementation, clear communication, depoliticization of pricing, and gradual implementation.
- Key empirical context: explicit fuel subsidies rose from 2.5 percent of GDP in 2000 to 6.5 percent of GDP in 2012 (while the fiscal deficit had increased to 7 percent of GDP).

### Jordan — move gradually & generate buy-in
- Pre-reform context:
  - By 2005 explicit fuel subsidies approached almost 6 percent of GDP.
- Reform actions and timeline:
  - General fuel price subsidies were removed in November 2012 by bringing all fuel products to operational cost recovery.
  - A monthly fuel price adjustment was reinstituted in early 2013.
  - Electricity tariffs increased three times since 2013.
  - Jordan started importing LNG after construction of a terminal in the port of Aqaba, allowing NEPCO to shift most generation from fuel oil and diesel to LNG by mid-2015.
  - Fuel prices were fully liberalized in 2015.
- Mitigating measures:
  - (i) Increase in public sector wages and pensions for those with low monthly income.
  - (ii) Compensatory cash transfers of $100 per person for families with an income below $1,130 a month (70 percent of population) if the oil price is above $100 per barrel.
  - (iii) Upgraded food subsidy program with improved targeting.
  - Wage increases benefitted some 60 percent of population.
  - The mitigation program cost an estimated 7 percent of GDP (World Energy Forum, 2013).
- Political economy: Wide advertisement of mitigation measures helped generate popular support; public discontent/protests never became widespread during the phase-in.

### Ghana — good preparations are not enough if political will is wavering
- Preparations:
  - A study showed subsidies disproportionately benefitted the rich; results were widely communicated.
  - Mitigating measures included elimination of fees for state-run primary and secondary schools, increases in public buses, a ceiling on public transport fares, increases in the daily minimum wage, and a rural electrification program.
- Pricing mechanism:
  - Automatic price adjustment formula adopted in 2005; administration transferred to National Petroleum Agency.
  - The mechanism proved fragile: automatic adjustments were suspended in the run-up to 2008 elections; in 2011–12 adjustments occurred very infrequently, allowing the price gap to widen and costing the budget significantly.

### Iran — frontload compensating measures
- Reform design and implementation:
  - Reform initiated in the high-oil price environment of 2010.
  - Instead of targeted transfers, a universal and unconditional transfer scheme was implemented.
  - 80 percent of the savings were intended for Iranian citizens and 20 percent for businesses affected by the price change.
  - Domestic fuel prices increased dramatically—by 400-1,000 percent—and direct cash transfers were made to almost all of the 75 million citizens.
  - To operationalize transfers, banks opened some 16 million new accounts and new ATMs were installed in remote areas.
- Outcomes and challenges:
  - Initially seen as successful: poverty rate fell.
  - With intensifying sanctions and later a sharp drop in oil prices, revenue to finance transfers declined; a large deficit opened in the Targeted Subsidy Organization requiring additional budgetary support.
  - Government ended spending about twice as much as the removed implicit subsidies, resulting in additional budget financing and higher inflation.
  - The real value of the cash transfer halved during 2011-13 due to high inflation, causing the poverty rate to rise.
  - Failure to adjust some fuel prices (e.g., diesel) led to subsidy re-emergence on some fuels.
  - Attempts to recalibrate targeting removed only around 2 million upper-income households from the beneficiary list, producing limited savings.
- Lessons highlighted:
  - Universal social safety nets plus active communications can enable bold price increases.
  - Reforms require appropriate monetary and fiscal policies to keep inflation anchored, well-targeted cash transfers that move with inflation, and a depoliticized price-setting mechanism.

### Bolivia — avoid abrupt price increases
- Action and reaction:
  - After a six-year price freeze, Bolivia increased fuel prices in 2010 by a sizeable 80 percent to combat smuggling.
  - The sudden increase provoked thousands of demonstrations and strikes; the government revoked the price hikes.

### Nigeria — weak institutional framework undermined public confidence
- Context and event:
  - In 2011 fuel subsidies were estimated at 1.9 percent of GDP (US$8 billion).
  - In January 2012 the government abruptly ended the subsidy program and gasoline prices more than doubled overnight.
- Political fallout:
  - Violent mass protests erupted amid corruption concerns and fears of elite capture; unrest forced a one-third cut in gasoline prices, partially restoring subsidies.
- Diagnostic:
  - Low public trust in political institutions limited the government’s ability to credibly argue for reforms.

### Do’s and Don’ts for Arab Countries — distilled lessons
- Think broadly: reform energy pricing as part of a comprehensive strategy promoting energy efficiency, aligning prices to market/cost recovery, and sequencing reforms to administrative capacity and institutional constraints.
- Be inclusive: compensating measures are essential to protect the poor and indirectly affected groups.
  - Preferred instruments: targeted cash transfers or vouchers to limit fiscal cost and preserve consumer flexibility.
  - If administrative capacity to target is lacking, universal cash transfers may be considered but risk outstripping savings.
  - Enrollment-based approaches can reduce leakage by making participation inconvenient for wealthier households.
  - For electricity, lifeline tariffs for low-consumption households are an option (examples: Armenia, Brazil, Kenya, Uganda).
  - Cash transfers are generally preferred over in-kind compensation to avoid distortions and corruption (illustrated by past gasoline distribution programs and Iran’s experience).
  - Direct Benefit Transfer (DBT) example from India: shift from subsidized LPG cylinders to paying full price and receiving cash transfers into bank accounts linked to a single LPG connection (DBTL).
  - These schemes require financial inclusion (banking services) and proper targeting.
  - Other compensation options: public works, education and health program expansion, help to switch to cheaper energy sources (e.g., kerosene to low cost LPG), training and assistance for displaced workers.
- Build public & political support: broad consultation and advance communication, with compensatory transfers introduced before price changes, improve acceptance.
- Depoliticize process:
  - Use transparent formula-based approaches or full liberalization rather than discretionary price fixing.
  - Automatic price adjustments help depoliticize, avoid reversals, and ease the transition to liberalized pricing.
- Move gradually: avoid abrupt and large price increases; gradual reforms provide time for households and businesses to adjust and reduce the risk of reversal.

### Box 4 — Formula-based adjustment in petroleum prices (illustrative scenarios)
- Mechanism description:
  - Reduce the prevailing price gap at each period (monthly in the example) by a pre-determined percentage until country-level price equals the reference (international) price; then move to full market liberalization.
  - Advantages: tailor pace to political/economic circumstances; transparent continuous re-evaluation.
- Example 1 (Bahrain):
  - In early 2016 Bahrain increased gasoline prices from US$0.2 per liter to US$0.33 in a one-off adjustment.
  - Counter-factual: the same adjustment spread over sixteen months under a formula-based approach could have positioned Bahrain to remove subsidies by 2018.
- Example 2 (Lebanon):
  - Lebanon’s diesel price has remained below the reference price.
  - Hypothetical: gradual adjustment over three years could reach the current reference price before shifting to market-based pricing.
- Data notes:
  - Actual prices provided by IMF country desks based on country authorities’ inputs.
  - Reference prices from IEA data on gasoline/diesel prices for the US, minus any taxes; forecasts use most recent WEO projections for oil price changes.

*Source: IMF staff analysis as presented in the supplied chapter text.*

### References

### gcc-energy-pricing-reforms - References

### References
- Alleyne, Trevor, 2013,” Energy Subsidy Reform in Sub-Saharan Africa Experiences and Lessons,” IMF Departmental Paper 13/2 (Washington: International Monetary Fund).
- Berg, A., and J., Ostry, 2008, “Inequality and Unsustainable Growth: Two Sides of the Same Coin?” IMF Staff Discussion Note No. SDN/08/11 (Washington: International Monetary Fund). Available via the Internet: https://www.imf.org/external/pubs/ft/sdn/2011/sdn1108.pdf
- Berg, A., J., Ostry, and, C., Tsangarides, 2014“Redistribution, Inequality, and Growth” IMF Staff Discussion Note No. SDN/14/02 (Washington: International Monetary Fund). Available via the internet: https://www.imf.org/external/pubs/ft/sdn/2014/sdn1402.pdf
- Clements, Ben, David Coady, Stefania Fabrizio, Sanjeev Gupta, Trevor Serge Coleridge Alleyne, Carlo A Sdralevich, 2013, “Energy Subsidy Reform: Lessons and Implications” International Monetary Fund, Washington DC.
- Coady, David, Ian Parry, Louis Sears, and Baoping Shang, 2015, “How Large Are Global Energy Subsidies?” IMF Working Paper WP/12/105, Washington DC.
- Ebeke, Christian and Constant Lonkeng Ngouana, 2015, “Energy Subsidies and Public Social Spending: Theory and Evidence,” IMF Working Paper 15/101 (Washington: International Monetary Fund).
- El-Katiri, Laura, and Bassam Fattouh, 2015, “A Brief Political Economy of Energy Subsidies in the Middle East and North Africa” The Oxford Institute for Energy Studies working paper No. 11 (University of Oxford).
- El-Katiri, Laura, 2014, “A Roadmap for Renewable Energy in the Middle East and North Africa” OIES Paper, MEP 6, Oxford Institute for Energy Studies.
- Fattouh, Bassam and El-Katiri, Laura, 2012, “Energy Subsidies in the Arab World” Regional Bureau for Arab Studies, Arab Human Development Research paper (New York: United Nations Development Programme)
- Fattouh, Bassam, and Others, 2016, “Striking the Right Balance? GCC Energy Pricing Reforms in a Low Price Environment” The Oxford Institute for Energy Studies Energy Comment (University of Oxford).
- Fattouh, Bassam, and Laura El-Katiri, 2013, “Energy Subsidies in the Middle East and North Africa” Elsevier, Vol 2 (November), pp. 108-115
- Global Subsidies Initiative, 2016, “Compensation Mechanisms for Fuel Subsidy Removal in Nigeria,” in cooperation with Nigerian Institute of Social and Economic Research (NISER).
- International Energy Agency, Organization of the Petroleum Exporting Countries, Organization for Economic Cooperation and Development, and World Bank, 2010, “Analysis of the Scope of Energy Subsidies and Suggestions for the G-20 Initiative” Joint report prepared for submission to the G-20 Leaders’ Summit, Toronto, June 2010.
- International Monetary Fund, 2015, “Energy Price Reform in the GCC—What Can Be Learned from International Experience?” Paper presented at the Annual Meeting of Ministers of Finance and Central Bank Governors, Doha, November 10.
- International Monetary Fund, 2016, “Economic Prospects and Challenges for the GCC Countries” Paper presented at the Annual Meeting of Ministers of Finance and Central Bank Governors, Riyadh, October 26.
- Jacobs, Meg, 2016, Panic at the Pump: The Energy Crisis and the Transformation of American Politics in the 1970s Hill and Wangs.
- Ladislaw, Sarah O., and Zachary Cuyler, 2015, “Adjusting to Low Prices: Prospects for Fossil-Fuel Subsidy Reform in Oil-Producing and Exporting Countries” (Washington: Center for Strategic& International Studies).
- Lahn, Glada, 2016, “Fuel, Food and Utilities Price Reforms in the GCC, A Wake-up Call for Business” The Royal Institute of International Affairs Research Paper (London: Chatham House).
- Lahn, Glada, and Paul Stevens, 2011, “Burning Oil to Keep Cool, The Hidden Energy Crisis in Saudi Arabia”, The Royal Institute of International Affairs (London: Chatham House).
- McLure, Charles E. Jr., 2013, “Reforming Subsidies for Fossil Fuel Consumption: Killing Several Birds with One Stone”, International Center for Public Policy Working Paper NO. 13-12, (George State University).
- Meltzer, Joshua, and Others, 2014, “Low–Carbon Energy Transitions in Qatar and The Gulf Cooperation Council Region”, Global Economy and Development Report, (Washington: Brookings Institute).
- Plante, Michael, 2013, “The long-run Macroeconomic Impact of Fuel Subsidies” Federal Reserve Bank of Dallas Working Paper No. 1303 (Texas: Federal Reserve Bank of Dallas).
- Sdralevich, Carlo, and Others, 2014, “Subsidy Reform in the Middle East and North Africa, Recent Progress and Challenges ahead”, IMF Departmental Paper 14/3, (Washington: International Monetary Fund).
- Spitzy, Joerg, 2012, “Energy Subsidies—An OPEC Perspective” Oxford Energy Forum, May 2012.
- Vagliasindi, Maria, 2012, “Implementing Energy Subsidy Reforms, An Overview of the Key Issues”, Policy Research Working Paper No. 6122, (Washington: The World Bank).
- World Economic Forum, 2013, “Lessons Drawn from Reforms of Energy Subsidies.”

### Annex. Arab Countries: Recent Energy Price Measures

- Oil Importers — Egypt
  - 2012–13
    - Increase for 95 octane gasoline by 112 percent for high-end vehicles.
    - Fuel oil price increase by 33 percent for non-energy-intensive industries and by 50 percent for energy-intensive industries.
    - Tariff increase by 16 percent on average for households.
    - Electricity tariffs have remained unchanged for the lowest consumption bracket.
  - July 2014
    - Increase for businesses and households (B&H) by about 20–80 percent.
    - Increase for B&H by about 20–80 percent on average.
    - Increase for B&H by about 20–80 percent on average.
    - Tariff increase by 10-50 percent.
    - Additional social expenditure budgeted in 2014 to cover a higher number of beneficiaries of social security pensions.
  - July 2015
    - Tariff increase for large consumers by 10–25 percent.
  - July 2016
    - Increase by 40 percent.
    - Increase by 31 percent.
    - Increase by 30 percent.
    - Increase by 40 percent on average.
    - Increase in LPG prices by 87.5 percent.
    - 1 percent of GDP in savings for 2016/17 has been set aside to be spent on social protection.

- Oil Importers — Jordan
  - 2012
    - Subsidies eliminated in November. Fuel prices adjusted monthly since January 2013, in line with international price developments.
    - Tariff increase for selected sectors (banks, telecom, hotels, mining) and large domestic B&H.
    - Compensatory cash transfers of $100 per person is going to families with an income below $1,130 a month (70 percent of population) if the oil price is above $100 per barrel.
  - 2013–15
    - Various tariff increases for selected consumers. Half of the 2015 electricity tariff increases repealed.
  - February 2015
    - The planned 15 percent increase for 2016 and 2017 not implemented.

- Oil Importers — Lebanon
  - Gasoline prices are fully liberalized, though fuel taxation is very low (diesel is exempted from VAT and is not subject to excises).
  - Unchanged tariffs since 1996.

- Oil Importers — Mauritania
  - 2012
    - New automatic diesel price formula introduced, to bring domestic fuel prices up to international levels. But formula has not been applied since then.
    - Gradual reorientation of social safety nets toward well-targeted cash transfers schemes, but progress has been very slow.
  - July 2014
    - Increase from 15 to 50 percent, maintaining a partial subsidy.

- Oil Importers — Morocco
  - June 2012
    - Price increase by 20 percent.
    - Price increase by 14 percent.
    - Industrial fuel price increase by 27 percent.
    - Direct transfers to electricity company to last four years while measures are taken to ensure the financial viability of the company.
  - September 2013
    - Partial indexation mechanism of certain products, with gasoline price increases by 4.8 percent.
    - Partial indexation mechanism of certain products, with diesel price increases by 8.5 percent.
    - Partial indexation mechanism, with fuel price increases by 14.2 percent.
    - Gradual strengthening of the existing social safety nets and social programs targeting the most vulnerable population groups through improvements in education, health, and assistance to poor widows and the disabled.
  - February 2014
    - Gasoline subsidies eliminated, with prices reviewed twice a month.
    - Per-unit subsidy of diesel reduced during 2014.
    - Industrial fuel subsidies eliminated (in June for fuel used for electricity generation), with prices reviewed twice a month.
    - Supporting public transport.
  - November 2015
    - Full liberalization of fuel product prices (diesel, gasoline and kerosene).

- Oil Importers — Sudan
  - June 2012
    - Price increase by 47 percent.
    - Price increase by 23 percent.
    - Jet fuel liberalized.
    - LNG price increase by 15 percent.
  - September 2013
    - Price increase by 68 percent.
    - Price increase by 74.7 percent.
    - LNG price increase by 66.7 percent.
    - Public sector wage increase of about SDG100; a monthly grant allocation of SDG150 for about 500,000 urban poor families (end-2014 target). Lower health insurance premium for about 500,000 poor families; and exemption of school and transportation fees for disabled people.
  - January 2016
    - LNG price increase by 200 percent.
  - November 2016
    - Price increase by 30 percent.
    - Price increase by 32 percent.
    - Tariffs increase by 160 percent.
    - Expanding the number of families covered by the cash-transfers program to 750,000 over the medium term.

- Oil Importers — Tunisia
  - September 2012
    - Price increase by about 7 percent.
    - Price increase by about 7 percent.
    - Tariff increase by about 7 percent.
    - Introduction of an additional lifeline electricity tariff for households consuming less than 100 kwh per month. Creation of a new social housing program for needy families. Increase of income tax deduction for the poorest households. Increase and expansion of the cash transfers program for poor families.
  - March 2013
    - Further 7–8 percent price increase.
    - Further 7–8 percent price increase.
    - Further 7–8 percent price increase.
  - May 2014
    - Natural gas prices increased by 10 percent.
  - July 2014
    - Price increase by 6.4 percent.
    - July 2014: diesel prices increased by about 7 percent.
    - Tariff increase for medium and low-voltage consumers by 10 percent.
  - 2015
    - Programmed increases for gasoline, diesel and electricity suspended.
  - January 2016
    - Price structure modified through an increase of excises.
    - Price reduced by 20 percent. Application of a symmetric fuel price mechanism to two types of diesel fuel.
    - Price structure modified through an increase of excises.
  - July 2016
    - Adoption of a symmetric fuel price mechanism to two types of gasoline, with partial implementation during the subsequent months.
    - Adoption of a symmetric fuel price mechanism to diesel, with partial implementation during the subsequent months.

- Oil Importers — Yemen
  - 2011–12
    - Prices increase by 66 percent.
    - Diesel price doubled. Diesel price unified across users in 2013.
    - Kerosene price doubled.
    - Increase in the Social Welfare Fund (SWF) transfers to the poor by 50 percent in December 2014.
  - 2013
    - Electricity prices unified across users.
  - July–September 2014
    - Price increase by 20 percent.
    - Private sector companies allowed to directly import diesel at international prices. Diesel price increased by 20 percent.
    - Kerosene price increased by 50 percent.
    - Coverage of SWF expanded to 500,000 additional families.

- Oil Exporters — Algeria
  - January 2016
    - Tax on petroleum products (TPP) increased from 1 dinar to 2.91 dinars, applied to the price of gasoline, resulting in a price increase of about 34–38 percent.
    - Tax on petroleum products (TPP) increased from 1 dinar to 2.91 dinars, applied to the price of gasoline, resulting in a price increase of about 34–38 percent. VAT on the sale of diesel increased from 7 to 17 percent.
    - VAT on the consumption of electricity beyond 250 kWh/quarter increased from 7 to 17 percent. Electricity rates increased by 15–31 percent for H&B consuming more than 250 kWh/quarter.
    - VAT on the consumption of natural gas beyond 2,500 thermal units/quarter increased from 7 to 17 percent. Natural gas rates increased by 15–42 percent for H&B consuming more than 2,500/thermal units/quarter.

- Oil Exporters — Bahrain
  - April 2010
    - Gas prices for new customers were increased from $1.30 to $2.50.
  - January 2012
    - Gas prices for old industrial customers were increased 50 percent, from $1.50 to $2.25 per mmbtu.
  - October 2013
    - Tariffs for electricity and water for non-domestic use were raised.
  - March 2015
    - The authorities increased fuel prices in marine stations.
    - Authorities announced annual increases of $ 0.25 per mmbtu in the gas price for industrial users starting on April 1, 2015 until the price reaches $4.0 per mmbtu by April 1, 2021.
  - January 2016
    - Regular gasoline prices were increased by 56 percent to about US$0.33 per liter; premium gasoline prices increased by 60 percent to about US$0.043 per liter.
  - March 2016
    - Electricity tariff increases will be phased in through 2019, with prices increasing 95 percent over that time period.
    - Nationals will be exempted from higher water and electricity tariffs announced in March 2016 on their first house.

- Oil Exporters — Iraq
  - 2000–08
    - Prices for gasoline raised 9-folds (from 50 dinars per liter to 450 dinars).
    - Administered prices for LPG increased 26 folds (from 150 dinars/cylinder to 4,000 dinars, over the entire period). Prices for kerosene raised 30 folds (from 5 dinars/liter to 150). Domestic price for gas oil raised 40 folds (from 10 dinars per liter to 400).
  - January 2016
    - Administered electricity tariffs were raised for all sectors to make the tariff structure more progressive.
    - The poorer segments of the population are not affected by the tariff increases.
    - Reducing gas flaring from oil wells and capturing the gas to be used as fuel in power generation (or for export) instead of reliance on imported gas or fuel is being addressed with the assistance of the World Bank.

- Oil Exporters — Kuwait
  - January 2015
    - Price increase by 100 percent.
    - Price increase by 100 percent.
  - May 2016
    - Effective from 2017, increase in electricity and water prices for foreign residents (residing in apartment buildings) and businesses (Kuwaiti citizens exempted). For foreign residents, electricity prices will go up from 2 fils to 5 fils for consumption levels below 1,000 kWh/month, 10 fils between 1,000–2,000 kWh/month and 15 fils above 2,000 kWH/month.
  - September 2016
    - Price increase by 70 percent. Low octane petrol rose by 41 percent (to 85 fils 28 US cents per liter), high grade petrol increased by 61 percent (to 105 fils 34 US cents per liter), and “ultra” petrol by 74 percent (to 165 fils 54 US cents per liter). A government committee will revise prices quarterly, depending on international oil prices.

- Oil Exporters — Oman
  - January 2015
    - Industrial price for natural gas has doubled.
  - January 2016
    - Price increased by 23 percent, to about US$0.36 per liter.
    - Price increased by 10 percent to US$0.42 per liter.
  - Feb-2016
    - Monthly adjustments of prices. As of February 2017 gasoline price is US$0.48 per liter.
    - Monthly adjustments of prices. As of February 2017 diesel price is US$0.53 per liter.
  - Feb–2017
    - The Omani authorities decided to fix the price for grade M91 fuel (regular gasoline) at the level announced for the month until a mechanism is in place to support certain segments of population.

- Oil Exporters — Qatar
  - January 2011
    - Prices increased by 25 percent.
    - Prices increased by 30 percent.
  - May 2014
    - Price increase up by 50 percent. Started improving desalination technologies and awareness of sustainable energy use.
  - October 2015
    - Electricity prices raised and tiered according to consumption.
  - January 2016
    - Price increase by US$0.35.
  - April 2016
    - Announcement of more regular adjustments of fuel prices, based on developments in the global and regional markets.
  - August 2016
    - Price increase by 4 percent (to US$0.45). The formula is indicative and applied on an ad hoc basis.

- Oil Exporters — Saudi Arabia
  - July 2010
    - Increased the average price of electricity sold to non-individual users by over 20 percent.
  - December 2015
    - Price of higher-grade gasoline increased by about 50 percent, to $0.24 per liter, while regular gasoline increased from $0.12 to $0.2 per liter.
    - Diesel prices increased from $0.07 per liter to $0.12 per liter for the transportation sector and $0.09 per liter for the industrial sector.
    - The authorities announced a reduction in electricity and water subsidies. Electricity tariffs for households increased by 35 percent on average.
    - Price of Methane and ethane gas raised from $0.75 per liter to $1.25 per liter and to $1.75 per liter, respectively.

- Oil Exporters — United Arab Emirates
  - January 2015
    - Abu Dhabi increased electricity tariffs by 40 percent.
  - August 2015
    - Fuel subsidies terminated, with pump prices of gasoline and diesel set on the basis of world prices and adjusted automatically every month.
  - January 2016
    - Electricity tariffs increased by 14 to 17 percent.

*Italic: Source — gcc-energy-pricing-reforms - References (PDF chapter/section).*

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_Source: https://www.imf.org/-/media/files/publications/dp/2017/gcc-energy-pricing-reforms.pdf_