The protests are about bread and butter

Jul 29, 2022 Features / Columnists, Peeping Tom

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Kaieteur News – On Wednesday, gasoline was being sold at petrol pumps in Saudi Arabia at half the price at which petrol was retailing in the United States. The reason for this is because the Saudis are subsidising the cost of petrol for their nationals. In 2019, the Saudi’s spent close to US$40B in energy subsidies, including subsidising the pump.

Even though the United States is also an oil-producing country, it does not subsidise its petrol sold at the pumps. There are, however, indirect subsidies to oil exploration and production.

In Guyana, the government offers massive indirect subsidies to the oil companies in the form of concessions. These subsidies are among the most generous in the world. They reduce the cost of doing business for the oil companies.

Yet, Guyanese consumers do not enjoy subsidies on petrol at the pumps. The government does not pay the companies engaged in the sale of petrol any sum to keep prices low. What the government has done to cushion price increases is to remove the excise tax on petrol.  The excise tax is revenue-generating measure and its removal is not a subsidy.

Guyana has earned bragging rights as an oil producing state. The country is said to be the fastest growing economy in the world. It is also said that we have the third largest reserves of oil in this part of the world. So given these statistics and the smallness of the economy, should the government not be subsidising the price of petrol at the filling stations.

The reason why this cannot happen is because the horrible deal which was signed between the government and the oil companies. Had there been a fair deal, the royalty rates would have been higher and the tax earnings from profits would have been payable. With those resources, the government would have been able to reduce the price of gasoline and dieseline at the pumps. It cannot do so at the moment because it simply cannot afford subsidies at the pump.

The Opposition had called for the government to subsidise the cost of petrol. Obviously, the Opposition has not done the math. Had it done so, it would have realised that the resources simply are not available, and will not be available, to pay subsidies to the companies which import and distribute petrol.

The government’s only option therefore was to remove the taxes on dieseline, gasoline and now lubricating oil. But despite doing this, the prices at the pumps are at their highest ever. As a consequence, transportation costs have gone up as it did in 1989.

In 1989, the then PNC government made a massive devaluation of the Guyana dollar. The nation was thrown into shellshock. Persons were so stunned by the resulting massive increase in prices including for petrol that they began to walk around in a daze.

Public service workers were badly affected. Some resigned because they could no longer afford the cost of transportation to and from work.  The PNC government response was that the taxes on bicycles would be removed. But when you are living in Parika, you cannot ride to work in the city.

The oil companies are contributing to the increase in the cost of living in another manner. They are renting buildings at an exorbitant rate and this has led to an increase in rentals.

The oil companies are renting buildings for its officials to the tune of thousands of US dollars. It is the bourgeois class, which is benefitting from these high rentals. They are buying up properties and refurbishing them and then renting them out to the oil companies. The government should look at increasing the taxes on rents and using that money to help the poor.

Officials of oil companies are also being accommodated at high-end hotels such as the Marriott. This is one of the reasons why rooms are so hard to secure at these hotels.

Now, condominiums are coming. This is being tailor-made for the foreign workers in the oil and gas sector. They are the ones being targeted but concessions are going to be given as if the economy is going to benefit.

But who do you think is paying for this luxurious accommodation? Guyana is fetching the tab. The Production Sharing Agreement provides for rentals to be cost recoverable and so the oil officials are living it up while fattening a small band of already super-rich Guyanese property owners.

When therefore you see those protestors with their placards calling for a better oil deal, this is an issue which impacts on the average consumer. The campaign for a better deal is a bread and butter issue.

The deal which was made is contributing to the increase in the cost of living – food, rent and transportation inclusive. The country is being shortchanged to the extent that it cannot even provide subsidies for petrol. The cost of rentals has skyrocketed to the extent that young couples are finding it impossible to rent a two-bedroom apartment.

Join the protest if you are concerned about the cost of living. And if you cannot, blow your horn when you are passing the protestors to let them know they have your support.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.)

 

 

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