One Fuel, Two Prices: International experiences with dual pricing of fuel

The document argues that dual pricing of fuel is generally difficult to implement due to high levels of leakage, illegal diversion, and shortages. It highlights that fuels easy to adulterate or smuggle, such as diesel, gasoline, and kerosene, are the hardest to dual price. The briefing examines various delivery mechanisms, noting that 'one-brand' systems using electronic transfers are generally more robust than 'two-brand' systems. Case studies from India, the Philippines, and El Salvador illustrate these challenges and potential technological solutions, such as smart cards and mobile phone-based subsidy transfers.

• International evidence suggests that dual pricing is typically difficult to implement without experiencing prohibitively expensive levels of shortages, illegal diversion, and leakage.
• Certain fuels are more susceptible to dual pricing failures than others; specifically, those that can be easily adulterated, smuggled, or diverted, such as diesel, gasoline, and kerosene, are the most difficult to manage under such regimes.
• Delivery mechanisms that offer two different brands of the same fuel (one subsidized and one not) are more prone to abuse than 'one-brand' systems that provide subsidy transfers, preferably electronically, after the purchase.
• In India, the attempt to implement dual pricing for bulk diesel in 2013 failed because transport companies shifted their purchases to retail outlets to avoid higher prices, and the policy lacked effective enforcement and state-level support.
• The Philippines successfully used limited-issue smart or debit cards to provide temporary diesel price relief to a well-defined group of licensed jeepney operators, though many informal operators were excluded due to lack of documentation.
• El Salvador implemented a mobile phone-based system for LPG subsidies where distributors use phones to validate beneficiaries via a PIN and receive electronic transfers, reducing the need for beneficiaries to have bank accounts.
• The use of high-technology solutions, such as smart cards and mobile phones, is not a guaranteed solution for preventing illegal diversion or ensuring target reach, as evidenced by implementation problems in Malaysia and Thailand.

APA

Beaton, C., & Clark, K. (2016). One Fuel, Two Prices: International experiences with dual pricing of fuel. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/one-fuel-two-prices-international-experiences-dual-pricing-of-fuel.pdf

Chicago

Beaton, Christopher, and Kieran Clark. One Fuel, Two Prices: International experiences with dual pricing of fuel. International Institute for Sustainable Development, 2016. https://www.iisd.org/system/files/publications/one-fuel-two-prices-international-experiences-dual-pricing-of-fuel.pdf.

Wikipedia

{{cite report |last1=Beaton |first1=Christopher |last2=Clark |first2=Kieran |title=One Fuel, Two Prices: International experiences with dual pricing of fuel |publisher=International Institute for Sustainable Development |date=August 2016 |url=https://www.iisd.org/system/files/publications/one-fuel-two-prices-international-experiences-dual-pricing-of-fuel.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{beaton2016one, author = {Beaton, Christopher and Clark, Kieran}, title = {{One Fuel, Two Prices: International experiences with dual pricing of fuel}}, institution = {International Institute for Sustainable Development}, year = {2016}, month = aug, url = {https://www.iisd.org/system/files/publications/one-fuel-two-prices-international-experiences-dual-pricing-of-fuel.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }