THE fall in prices for fuel on the international market has not only resulted in a reduction of prices for gasoline and diesel locally, but a 10 percent drop in electricity tariff across the board.President Donald Ramotar made the announcement yesterday at the commissioning of the Vreed-en-Hoop, 26-megawatt power plant in Region 3, (Essequibo Islands-West Demerara), the largest power station in the country.
More details on the reduction which will take effect from March will be made known today at a press briefing hosted by the Guyana Power and Light Company (GPL).
On January 20, fuel prices at GuyOil outlets dropped to $695 per gallon for gasoline compared to $995 previously, a 30 percent reduction. The price for diesel was also reduced to $694 per gallon from $985, also a 30 percent reduction.
In addition, the price for kerosene was reduced by 42 percent, dropping from $850 per gallon to $496 per gallon.
Finance Minister, Dr. Ashni Singh in a Government Information Agency (GINA) report said the prices are the lowest locally since May 2009, a period of almost six years.
The excise tax has been increased to 50 percent, diesel to 45 percent and zero percent for kerosene.
The tax rate is adjusted in an inverse relation to the movement of world market crude oil prices, and rates are adjusted downwards when international prices increase and upwards when the aforementioned prices decrease.
CUSHIONING PRICES
This has been used to cushion prices to local consumers from international market volatility, he added.
“For example, during the period from December 2008 to March 2012, the world market price increased by 184 percent and the price for a gallon of gasoline in Guyana only increased by 77
percent. This was achieved by Government lowering the tax rate during that period from 50 percent to 15 percent. Conversely, as prices started to subside on the world market, the tax rate was adjusted back up. This has been done automatically and without any contention, for the past several years,” GINA reported the Minister as saying.
Prices are determined by the Cost, Insurance, Freight (CIF) on landing in Guyana, the world market prices for refined fuel products and world market prices for crude oil, Dr. Singh explained.
Excise taxes in landed fuel and profit margins charged by local oil companies and retailers also influence prices, the Minister added.
President Donald Ramotar said the reduction in electricity will come from a fuel rebate, which according to its license, operate on a quarterly basis.
“The reduction in electricity prices will put more disposable income into the pockets of our people,” the President said.
VERY RELIEVED
Meanwhile, the Guyana Manufacturing and Services Association (GMSA) said it is very relieved that the Government has taken the bold step to reduce electricity rates by 10
percent across the board.
President Ramotar’s announcement will certainly be welcomed by Guyana’s manufacturers, service providers, commercial entrepreneurs, exporters and every other category of business owner, the GMSA said in a statement.
This announcement, the GMSA hopes, is the first step towards significantly alleviating the high overhead costs for production and distribution of ‘Made in Guyana’ products.
“Electrical energy is without doubt the most significant input into most, if not all, production processes. Guyana’s large and small scale producers and exporters have long indicated that the prices for their products have made them (products) uncompetitive in the export market, a situation which has been attributed to high energy charges. Inevitably this situation led to some contraction in the manufacturing sector,” the body representing manufacturers said.
The GMSA is anticipating that the imminent reduction in electricity charges would spur industrial growth across all sectors, encourage diversification and birth new enterprises.
“We have been watching closely the world’s responses to the dramatic fall in global fuel prices and we did anticipate that our manufacturers and the business community at large would begin to benefit sooner rather than later. In the same context, we anticipate that the costs for raw materials, transportation and related factors of production would simultaneously decrease,” the release concluded.
