Inefficient fuel pricing in SA

IMF argues there is large mispricing of coal in South Africa, with a large gap between efficient prices (representative of supply, environmental, and other costs) and retail prices. Their estimates are very large: they suggest that implicit subsidies (undercharging for supply and environmental costs) total to over to over 10% of GDP.  The efficient price of residential coal is 8 times higher than the consumer price in 2022, while the residential price of electricity is only 17% underpriced. Explicit fuel subsidies in SA totaled USD5 billion in 2022 (1.2% of GDP), compared to an estimated implicit subsidies of USD56 billion  (12.8% of GDP).

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