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Non-reduction of fuel prices…Gov’t wasting chance to provide stimulus for consumers, miners – Jagdeo
Leader of the Opposition, Bharrat Jagdeo, is slamming the Government for what he perceives as the failure to stimulate the economy by ensuring that Guyanese consumers feel the trickle down effects of the global drop in oil prices.
Leader of the Opposition, Bharrat Jagdeo
During a press conference at Freedom House yesterday, Jagdeo took the Government to task, saying that while the acquisition costs for fuel importers have dramatically been lowered, there has been no move to ensure that the price consumers have to pay is lowered.
“The non reduction of the price at the pump has led to a huge windfall (profit) for oil companies,” the former Head of State said. “Their rate of acquisition is reduced.”
He noted that one measure that was employed in the past was to first have fuel prices reduced at the state owned Guyana Oil Company (GUYOIL), in order to ensure that other privately held gas stations followed suit.
This indeed occurred in January 2015, when the then administration moved to slash diesel and gas prices at the pumps by some 30 percent because of the global drop. At the time, fuel prices were at their lowest since 2009.
Jagdeo also took aim at the Guyana Power and Light (GPL), declaring that electricity rates should have tumbled by now, since oil is a major facet in providing electricity. He noted that this was just one way in which consumers were losing out.
“We are filling the coffers of GPL, but the ordinary people and businesses get no stimulus,” he said. “This could have been a major stimulus to citizens and the business community (including) miners. But we have missed a huge opportunity.”
World prices for oil recently recorded its lowest in 13 years, with several big countries left reeling in the wake of the drop.
For the most part, the world price has stabilized at under US$29, but some analysts are projecting that the price may well fall below US$25.
Currently, Government is collecting up to 50 percent excise tax on every barrel of gasoline and diesel coming in– monies that Government says it can ill-afford to lose now because of the country’s under-performing key sectors.
That excise tax is in actuality the highest since last year when prices started its downward spiral on the world market. Back then, it had stood at 45 percent. A decision was reportedly taken to hike the tax to 50 percent in the last quarter.
Leader of the Alliance for Change (AFC), current Vice President and Minister of Public Security Khemraj Ramjattan, was recently asked whether there will be moves to lobby for a drop from the current 50 percent tax.
“As the AFC leader, I would love to see a reduction but we (Government) will have to make a collective decision,” Ramjattan had said. “And because there is a lot of expenditure that we have to incur in relation to the social projects we have, the argument will forever be made that revenues will have to be taken in somehow, to carry them out.”
Ramjattan had also posited that because of poor world prices for rice, sugar and even gold, the shortfall in revenue is being felt.
“And so it might not be the (best) time to carry that down. I can see an argument and I can make the argument as to why we just can’t carry it down, especially in the context of our three primary products (and) the current prices on the world market.”
Ramjattan had queried that if the world market prices for all the country’s key products slump, “How do you get the revenues to run the social projects?”
“It is extraordinarily difficult,” Ramjattan had said. “We can have the benefit of a reduction, but we will have to run with the burdens also of the lower revenues for sugar and gold and rice and so on, and that is the constraining factor that I will argue why it should not be done at this time.”
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