Minister of Finance Dr. Ashni Singh announced yesterday that government is implementing a drastic cut to the excise tax charged on gasoline, with the aim of cushioning the impact on domestic consumers of significant upward price movement observed in the world market for oil. Minister Singh indicated that the necessary instructions had been issued to reduce the gasoline excise tax by one third, from 30 percent to 20 percent. This change will take effect from this morning. This latest announcement comes on the heels of a move made by the minister just last month to reduce the tax on diesel from 20 to 15 percent.
The minister indicated that while crude oil was trading at prices in excess of US$100 per barrel and as high as US$115 per barrel in some markets, Guyanese oil companies were actually sourcing refined petroleum products from their established suppliers at prices in the range of US$130 per barrel. In fact, Minister Singh pointed out, the quoted price for the last shipment of gasoline loaded for Port Georgetown was registered at US$126 per barrel, while the corresponding price for diesel stood at US$131 per barrel.
While the extraordinary external price increases observed are the result of well-known developments in the major oil producing centres, including especially the Middle East, they have the potential to exert significant impact on economies that are large oil importers and small economies dependent on imported oil.
Minister Singh pointed out that Guyana had made considerable progress in recent years to consolidate its resilience to external shocks, such as adverse commodity price movements. Nevertheless, as long as Guyana remained as dependent on imported oil as it currently is, it will have to continue to contend with the reality of exposure to such developments.
It is for this reason, the minister emphasised, that government was working so intently and assiduously to ensure the success of the Amaila Falls Hydropower Project, which would significantly reduce Guyana’s fuel import bill and minimise the impact of fuel price movement on the cost of generating power. It is also for this reason that government continues to actively encourage activities in petroleum exploration, with the prospect that Guyana can itself become in a few years a producer and exporter of oil.
Meanwhile, Minister Singh pointed out that, just as the productive sector is sensitive to the price of diesel at the pump, so is the general consumer sensitive to the price of gasoline at the pump.
The minister emphasised that government’s move to reduce the excise tax on gasoline was made specifically with the intention of minimising the impact of these adverse external developments on the domestic consumer and on the productive sector.
The minister also pointed out that government continues to charge no tax on kerosene, in order to ensure that this product is available to final consumers at the lowest possible cost.