Arya News - Diesel has accounted for 97 percent of Bhutan`s fuel price support since its price stabilisation mechanism was introduced in March 2026.
THIMPHU – Diesel has accounted for 97 percent of the government’s fuel price support since the price stabilisation mechanism was introduced in March, while petrol has largely balanced out through recoupment, according to government data.
Between March 22 and September 1 this year, the government provided more than Nu 2 billion in price support for petrol and diesel. Of this, Nu 1.98 billion, or about 97 percent, went towards diesel.
During the same period, the government recouped Nu 148.6 million from fuel prices, about 7 percent of the support provided.
The figures show a huge difference in how the two fuels have performed under the price stabilisation mechanism.
The government provided Nu 67.4 million in support for petrol, while it recouped Nu 75.3 million, leaving a net recoupment of Nu 7.9 million.
For diesel, however, the government provided Nu 1.98 billion in support but recouped only Nu 73.3 million, leaving a net support burden of about Nu 1.9 billion.
The difference is notable given that diesel imports during the period were about 62,963 kilolitres, compared with 24,584 kilolitres of petrol.
Despite accounting for around 72 percent of the combined petrol and diesel import volume, diesel accounted for almost the entire price support bill.
Petrol, on the other hand, saw periods when the government was able to recoup the support provided when import prices fell below the reference level.
For instance, Nu 13.37 million in petrol price recoupment was recorded between August 17 and September 1.
The price stabilisation mechanism works by absorbing part of the increase in fuel import costs when prices rise above a reference level. When import costs fall below the reference level, the difference can be recouped.
The mechanism is intended to prevent sharp changes in retail fuel prices while allowing the government to recover support when market conditions improve.
However, the data for the six-month period shows that the support and recoupment flows have not been balanced, particularly for diesel.
The large gap in diesel support could have implications for government finances if the trend continues.
Diesel is widely used in transportation, freight, agriculture and other economic activities. Continued increases in the cost of diesel imports could therefore put further pressure on the price stabilisation fund if the government continues to absorb the difference.
According to sources, fuel prices are also expected to rise in the next pricing cycle as crude oil prices have started climbing again.
However, the Indian rupee has remained relatively stable for now, meaning depreciation of the rupee has not added to price pressures over the past two pricing cycles.
The price revision takes place every 15 days.