The government could spend up to Nu 1.4bn per month on fuel subsidies if current consumption patterns continue and fuel prices remain unchanged. The Prime Minister’s Office estimates that maintaining the subsidy at the current rate through June would result in a total expenditure of nearly Nu 4bn.
In a press release, the Prime Minister’s Office stated that the surge in global fuel prices in recent weeks, driven by external factors beyond the country’s control, has led to an increase in fuel prices.
Across several parts of the country, including Thimphu, people were seen rushing to fuel their vehicles.
With effect from midnight, fuel prices in Thimphu increased to Nu 114.31 per litre for petrol and to Nu 174.13 per litre for diesel.
However, with the subsidy in place, petrol is priced at Nu 98 per litre, while diesel is slightly higher at Nu 98.31 per litre.
Despite the relief provided, the government acknowledged that the subsidy places a significant burden on government money. As a result, all public service agencies have been directed to implement measures to reduce fuel consumption, including walking to work, minimising non-essential travel, and adopting remote working arrangements.
The government has also appealed to the private sector and the general public to adopt similar practices, stressing that collective efforts and responsible fuel consumption are critical to easing pressure on national resources.
Recognising the impact on households and the economy, the government introduced a fuel subsidy under the National Fuel Price Smoothening Framework last month. The subsidy is reviewed fortnightly in line with global fuel price movements, with domestic fuel prices adjusted accordingly. The government maintains reserves to be used during emergencies.
As of today, reserves stand at 15,000 units of LPG, 1.4 million litres of petrol, and nearly 1.5 million litres of diesel. However, the ministry stated that these reserves are intended for use only in worst-case scenarios, such as a complete supply disruption.
Samten Dolkar
