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Fuel prices dropped by 30 percent; private sector welcomes move

As world oil prices continue to tumble, the Guyana government has announced that the prices of gasoline, diesel and kerosene would be reduced by almost 30 percent- a move that was almost immediately welcomed by the Private Sector Commission (PSC).

Finance Minister, Dr. Ashni Singh said the drop in prices would take effect at midnight Monday, January 19, 2015 at GuyOil branches and eventually at its branded outlets countrywide.

In welcoming the “timely intervention,” the PSC expressed appreciation that Singh favourably considered their appeal for an adjustment in local prices at the pump as world market prices plunged.”

“This move will provide a significant boost to industry, especially our manufacturers, and comes at a time when the effect of weak commodity prices are impacting the economy,” the business organisation said in a statement. “The Private Sector Commission is hopeful that the reduction in fuel prices will be passed on to the average consumer in the form of lower costs for transportation and other goods and services.”

The Finance Minister announced gasoline will now be retailed at GYD$695 per gallon, compared to GYD$995 per gallon currently, a 30 percent reduction; diesel will now be retailed at GYD$694 per gallon, compared to GYD$985 per gallon currently, also a 30 percent reduction and kerosene will now be retailed at GYD$496 per gallon, compared to GYD$850 per gallon currently, a 42 percent reduction.

Singh further announced thatin keeping with the established mechanism to adjust excise taxes on fuel, notwithstanding the price reductions, gasoline would now attract excise tax at a rate of 50 percent, and diesel at a rate of 45 percent, with effect Tuesday morning. These rates will continue to be adjusted upwards and downwards as the world market price fluctuates. Government will continue not to charge any excise tax on kerosene.

Government hopes that other fuel importers and suppliers will follow GuyOil’s lead and reduce their prices. The Finance Minister called on transportation providers to reduce their fares now that fuel prices have been reduced at the pump. “I wish also to urge the providers of transportation services, including public transportation, to consider passing on these reductions in fuel prices immediately to the customers and the travelling public,” he said.

Explaining that the excise tax rates are adjusted downwards when world market prices are increasing and upwards when the prices are reducing, Singh said that mechanism has been used very effectively to cushion the impact of imported price volatility.

He recalled that fr example, during the period from December 2008 to March 2012 the world market price for crude oil increased by 184 percent, but the price for a gallon of gasoline in Guyana only increased by 77 percent. “This was achieved by the Government lowering the tax rate on gasoline from 50 percent to 15 percent. Conversely, as prices started to subside on the world market, the tax rate was adjusted back upwards. This has been done automatically and without any contention for the past several years,” he said.