Cabinet mulls “creative solutions” to rising fuel prices

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Amid widespread concerns about the rising fuel prices here, the Government has now disclosed that it will be considering “creative solutions” to reduce the impact of the high world-market costs.

Quoting the Minister of Finance, Winston Jordan, an article from the Department of Public Information (DPI) said Cabinet discussed the matter, including calls from the Minibus Association for fares to be increased.

“Only last Tuesday at Cabinet this matter was raised and so we will have to find creative solutions to the problem of rising fuel prices,” the Finance Minister is quoted as saying.

However, Jordan did not expand on what are some of the solutions being considered or how soon the measures will be implemented.

He explained that the goal is to develop a mechanism to ensure the rising fuel prices internationally will not have negative effects on Guyana’s balance of payments.

Minister of Finance, Winston Jordan

The Finance Minister contended that the formula used by the previous administration to adjust the fuel prices locally cannot be applied under the coalition government because of the PetroCaribe deal.

“They say they had a formula in place where they used to reduce the excise tax so that people used to buy gas at the same price they used to buy before.

“I’m aware that indeed they had such a formula, but this is not only about whether government will still get the same amount of revenues that they had budgeted. It also has that external side… the side that has to do with finding the foreign currency to buy the same quantity of gas that you were consuming when the prices were low,” Minister Jordan said.

The DPI had previously reported that the previous administration was only able to adjust the prices so swiftly because of certain benefits that came with the PetroCaribe deal – which saw Guyana trading rice in exchange for fuel at favourable prices from Venezuela.

Venezuela, however, cancelled that deal shortly after the change of government in 2015.

The Finance Minister had explained: “How did the last government do it? Well in large measure because they had access to the PetroCaribe arrangement. That arrangement with Venezuela allowed the government to import expensive fuel from Venezuela, but only pay Venezuela a small part of what is owed to them and the rest rolled over into a long-term concessional financing.

“So, at any one time, the last government didn’t have to face the proposition that we have right now which is we have to find 100 percent of the cost of the fuel and pay for it immediately. When you have an arrangement such as the PetroCaribe it doesn’t affect your balance of payment significantly.”

Opposition Leader Bharrat Jagdeo has since rejected that justification for not adjusting the fuel prices locally. He contended that the Government has enough fiscal space to lower the excise tax because it raked in windfall profits about a year ago when world-market prices were at an all-time low and the prices on the local market remained the same.

DPI reported that the State – owned GuyOil currently retails gasoline at $220 per litre, which means private service stations’ prices will be a few dollars higher.

A few weeks ago, the prices were nearing the $300 mark per litre, triggering widespread protests across the country.

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