The Japanese government plans to continue providing subsidies for domestic oil products, electricity and city gas until 30 April 2024, beyond the previous end date at the end of this year.
Tokyo on 2 November confirmed it will extend the subsidies until the end of April to mitigate the impact of soaring energy prices and inflation. The government previously only announced plans to extend the subsidies until the spring next year.
The government is aiming to maintain the current grant level for oil products such as gasoline, gasoil, kerosine and fuel oil. With the subsidies, domestic retail gasoline price will be kept at around ¥175/litre ($1.16/litre) until April next year. The subsidies may fall gradually from May, possibly by three tenths each month, if the government can foresee ending the subsidy scheme if the economic situation improves.
Japan's minister of trade and industry Yasutoshi Nishimura previously reiterated the the importance of an exit strategy, as the subsidies require a few trillion yen of public spending. Transforming the country's economy into a more "energy crisis-resilient structure" is required, he added.
Funding for utility bills until April next year will also stay at ¥3.50/kWh to residential power consumers and ¥1.80/kWh to companies facing difficulties passing on power cost increases to their consumers. A grant of ¥15/m³ will be provided to city gas consumers, such as companies that use less than 10mn m³/yr, and households. Tokyo plans to cut the subsidies from May, although it is still unclear how much the reductions will be.
The details on subsidy plans were published along with Tokyo's comprehensive economic stimulus package worth over ¥17 trillion. The subsidies are not "inefficient fossil fuel subsidies that encourage wasteful consumption," said trade and industry ministry Meti, in reference to G20 members pledging to phase out and rationalise fossil fuel subsidies over the medium term.
