The diesel-subsidy gap, March–May 2026

In March and April 2026, the global diesel price shock forced Bhutan’s government into a series of subsidy interventions. On 17 April 2026 the unsubsidised cost peaked at Nu 199.66/litre. To hold the consumer price at Nu 98.31, the government covered Nu 101.35/litre out of the public purse — meaning, for every litre sold at the pump, the state was paying more than the consumer.

By 23 May 2026 the subsidy had been reduced to Nu 23/litre. The petrol subsidy was lifted entirely on 16 May. Total subsidy spending to date: Nu 1.45 billion.

The episode is a clean illustration of the closed-loop dependency: Bhutan’s hydropower exports earn it foreign exchange; its fuel imports immediately spend that foreign exchange back; and when global fuel prices spike, the fiscal cost lands on Bhutanese taxpayers in real time.