The Bhutanese Leading the way.
Under the National Fuel Price Smoothening Framework (NFPSF), the Government has provided a total of Nu. 2.047 billion (bn) in fuel price support from March 11 to September 1, 2026.
The bulk of this amount has been for diesel. 62,963 kiloliters of diesel or 62.963 million (mn) liters sold to the public got a price support of Nu 1.979 bn, coming to an average of Nu 31.43 per liter in support during these months.
A much smaller amount has been given for petrol. 24,458 kiloliters of petrol or 24.458 mn liters have been given a price support of Nu 67.411 mn, coming to an average support of Nu 2.75 per liter.
This means that of the total support, Nu. 1.979 billion (96.7%) was provided for diesel, while Nu. 67.4 million (3.3%) was provided for petrol.
As per the September 1 prices, diesel is getting fuel price support of Nu 19.63 per liter. The actual price of diesel is Nu 124.13 per liter, but after the support, it has come down to Nu 104.50 per liter.
On the other hand, petrol is paying back Nu 2.14 per liter under the Related Adjustment Factor (RAF), which means that petrol in Thimphu should be costing Nu 97.02 but instead costs Nu 99.17 per liter.
Prices went up from August 1 as the ceasefire between the USA and Iran failed.
The price of diesel in late July was Nu 95.96 per liter even after a RAF of Nu 2.62, and petrol was Nu 85.06 per liter after a RAF of Nu 11.81.
On August 1, the actual price of diesel in Thimphu at the pump should have been Nu 123.13 per liter, but after a Nu 18.63 price support per liter from the Government, people were paying Nu 104.50 per liter. Petrol jumped to Nu 99.17 per liter at the time.
Prices have gone up due to the continued failure of the ceasefire and the Strait of Hormuz still being closed, with much less oil getting through as the USA and Iran continue fighting. The US blockade on Iran is also making matters worse.
India’s crude oil basket price, or the rate at which it buys crude from the international market, has increased from USD 90.19 per barrel in August to USD 97.32 in September.
However, Bhutan does not get fuel from India at crude oil prices. Instead, Indian Oil Marketing Companies (OMCs) price petrol against the 92 RON Singapore Gasoline benchmark, which represents the price of processed petrol loaded onto ships in Singapore. This is the Asian benchmark for commercial export markets.
The average price under this benchmark was USD 110.87 in August, but it has gone up to USD 120.65 in early September, which explains the hike. It is on this rate that Indian OMCs add transportation, marketing, and other operational margins before selling fuel to Bhutan. The low point of petrol was USD 106.78 in July.
Diesel is priced against the Arab Gulf Gasoil benchmark, which reflects the price of processed diesel loaded onto ships in the Middle East. The average price in August was USD 149.35 per barrel, but it has gone up to USD 156.44 in early September, which also explains the hike. Here too, Indian OMCs add their respective margins. The low point of diesel was when it was USD 120 per barrel in June.
