Posted on July 20, 2015

Qatar has been named the top per capita energy subsidiser in the world. International Monetary Fund’s (IMF) latest update of global energy subsidies shows Qatar is the top subsidiser in terms of per capita, China is top in dollar terms and Ukraine in percent of GDP.

Qatar’s total energy subsidies (post-tax) are projected to hit an estimated $14.47bn this year. Of this, petroleum subsidy accounts for $6.78bn, while natural gas and electricity subsidies account for $5.17bn and $2.51bn, respectively. Qatar’s energy subsidies in terms of per capita are projected at $5,995.25 for 2015. A product breakdown shows petroleum as the highest subsidised product, amounting to $2,810.29 per capita. Natural gas amounts to $2,143.83 and electricity subsidy $1,041.12.

According to IMF, Qatar’s energy subsidy is expected to touch 6.37 percent of its GDP this year. Petroleum subsidy accounts for 2.99 percent of GDP, natural gas 2.28 percent and electricity 1.11 percent. The country-level estimates in GCC shows Kuwait is the second biggest per capital energy subsidiser ($3,429.95), followed by Saudi Arabia ($3,395.03). In GDP terms, Saudi Arabia is the top energy subsidiser in the region (13.23 percent), followed by Oman (8.90) and Kuwait (7.79). 

With $106.56bn, Saudi Arabia is the topper in the region in post-tax energy subsidies in dollar terms. Globally, energy subsidies are projected at $5.3 trillion this year, or 6.5 percent of global GDP, according to the IMF. Most of this arises from countries setting energy taxes below levels that reflect the environmental damage associated with energy consumption. Energy subsidies are dramatically higher than previously thought. Estimates for global energy subsidies in 2011 have been revised to $4.2 trillion, more than double the $2 trillion reported by IMF in 2013.

Subsidies are projected to remain high, despite sharp declines in international energy prices. High growth in energy consumption, especially coal, inflation and real income growth, and persistent undercharging for environmental costs are key factors. Energy subsidies are sizable in nearly all countries, advanced and developing economies alike. According to the IMF, the bulk of energy subsidies in most countries are due to undercharging for domestic environmental damage, including local air pollution — especially in countries with high coal use and high population exposure to emissions — and broader externalities from vehicle use like traffic congestion.

In many top subsidisers in percent of GDP and per capita terms, these also reflect the setting of domestic energy prices below their supply cost, the IMF said.

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