Finance Minister Dr. Ashni Singh this afternoon announced that fuel prices at state-owned GUYOIL gas stations will be slashed by around 30% by tomorrow.
This is as a result of the drastically declining price of oil on the international market. There had been calls on the government to drop the price at the state gas stations. It is expected that the privately-run gas stations will follow suit.
The minister’s statement follows:
Government has had in place, for the longest while, a well-functioning mechanism for adjusting excise taxes charged on fuel products. Under this mechanism, the ad valorem tax rate is adjusted in an inverse relation to the movement in the world market price. In other words, the excise tax rates are adjusted downwards when world market prices are moving upwards, and the excise tax rates are adjusted upwards when world market prices are moving downwards.
This mechanism has been used very effectively to cushion the impact of imported price volatility. For 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.
Recall that the price at the pump is determined by the following factors:
a. The CIF cost of landing fuel in Guyana (which is itself determined by the world market price for refined fuel product and crude oil, in turn);
b. The excise tax charged on fuel landed in Guyana; and
c. The profit margins charged by the oil companies and their retailers.
As you know, the world market price for oil has been declining in recent months. As a result of these declines, I now wish to announce that the Guyana Oil Company (GUYOIL) will commence selling fuel at the following prices with effect from later tonight:
a. Gasoline will now be retailed at $695 per gallon, compared to $995 per gallon currently, a 30 percent reduction;
b. Diesel will now be retailed at $694 per gallon, compared to $985 per gallon currently, also a 30 percent reduction;
c. Kerosene will now be retailed at $496 per gallon, compared to $850 per gallon currently, a 42 percent reduction.
I am advised that these newly announced prices are the lowest seen at the petrol pump in Guyana since the first half of 2009, nearly six years ago. In keeping with the established mechanism to adjust excise taxes on fuel, notwithstanding the afore-mentioned price reductions, gasoline will now attract excise tax at a rate of 50 percent, and diesel at a rate of 45 percent, with effect from tomorrow 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.
As I indicated earlier, the price adjustments just announced will commence being implemented by GUYOIL from tonight. It is anticipated that by Wednesday all GUYOIL branded petrol stations and dealers would have implemented these new prices. I wish to urge the other oil companies operating in Guyana to follow suit and reduce their prices similarly. 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.
