WHEN WILL MORE PRICES FALL?

Feb 14, 2015 Features / Columnists, Peeping Tom

I cannot think of any time in the history of Guyana that electricity tariffs have come down. They always move in the opposite direction, never steeply but progressively enough to represent a real burden on citizens.
In this context, the recent decision of the Guyana Power and Light Company to reduce tariffs is both historical and welcome. It is the first time that I can recall there has been a decline across the board in electricity rates and a 10% decline is sufficient to be appreciated by consumers who, unless you are living in Linden, are paying prohibitively high tariffs.
There was pressure on the power company, including calls from the opposition parties, for a decline in tariffs. This call has been answered. Many people believe that this decline in part of the government’s piñata for the forthcoming elections. The fact however that the opposition called for the reduction in electricity rates, in the face of declining acquisition costs for fuel, means that the opposition parties are muzzled from criticizing the reduction as an election gimmick.
Late last month the government slashed fuel prices by the largest amount ever, again after pleas were made for consumers to benefit from reduced oil prices. The price came down and the government has gained considerable political traction for its responsiveness to the demands for reduced prices at the pump. But one has to question why it took action by the government-owned petrol distributor, GUYOIL, for the prices to dip. In a market economy, one expects that it would have been the private companies that would have led the way in reducing prices.
Consumers will welcome both the reduction in prices at the pump and in their electricity invoice. But they will be gravely disappointed that private transportation operators have not reduced their prices. These operators were only too eager to increase their fares when fuel prices increased. Now that there has been a 30% reduction at the pump, it is unconscionable that the private transportation operators are not reducing their fares.
They should be made to. When at a slight increase in petrol price, these operators threatened to increase fares, the government put some big buses on the road, offering free transportation during peak hours. The private transportation operators buckled under the pressure and decided to shelve a proposed increase. They did however, in the end, manage to secure an increase for some routes through negotiations.
Now that the cost principal operating input of public transportation has been slashed by 30%, the government should again pressure these private operators to decrease their prices. The government should bring back the big buses during peak hours in the mornings and in the afternoons. This will bring the private transportation operators to their senses.
We have lived in a country where oil prices have fluctuated. In the 1970’s they rose appreciably and caught everyone off guard. Prices increased and never went down. Decades later, oil prices slumped to their lowest ever but still prices did not go down. A few years ago, there was a steep surge in oil prices and prices went up again. Now that it has come down, it is a credit to the PPPC administration that they have brought down the prices of two major inputs, fuel and electricity.
A 10% increase decline in prices is significant in any economy. And the manufacturers have welcomed it. But they are likely to refuse to decrease their prices while claiming that they are not sourcing electricity from the national grid, they are self- generating. They too should be pressured to reduce prices.
Last weekend, I went to the cinema and found that the weekend prices for tickets were thirty per cent higher than the week a day prices. The private sector is not following in the footsteps of the government by reducing prices. They should.

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