Slashing of fuel prices: Govt has taken a “hands on” approach – GOGEC

Calling the Government’s approach “hands on and proactive”, the Guyana Oil and Gas Energy Chamber (GOGEG) on Sunday commended the Government for the decision to slash fuel prices at the Guyana Oil Company (GuyOil).
GOGEC President Manniram Prashad on Sunday lauded the reduction, through GuyOil, of gasoline by 20 per cent and diesel by 15 per cent, while recalling the various other measures the Government took to address cost of living leading up to this.

GOGEC President Manniram Prashad

“Since the outset of the rising cost of living phenomenon followed by the global supply chain disruptions, the devastating economic impact of the COVID-19 pandemic, and geopolitical tensions in other parts of the world, His Excellency, President Dr Mohamed Irfaan Ali has taken a hands-on and proactive approach in confronting the effects of these developments on the domestic economy,” GOGEC President said in a statement.
“Cognisant of the fact that fuel is a major source of energy across all sectors and households, it’s an input cost for almost [all of] the production of all goods and services, the Government, as part of its menu of cost-of-living measures to help cushion the impact, reduced the Excise Tax on fuel from 50 per cent to 0 per cent in less than two years.”
According to GOGEC, this reduction translated to approximately $20 billion in annual revenues for the Government… revenues it had to forgo. With this additional measure, GOGEC said it estimates this will cost the Government between $5 billion and $10 billion in foregone annual revenues.
“Notwithstanding, these are bold and commendable measures implemented by the Government in an effort to bring further relief to consumers in the short term. GOGEC is also confident that these measures will be sustainable through the medium term until the materialisation of a few major transformational development projects that will seek to safeguard Guyana and the region from external shocks – such as the regional energy and food security agenda,” GOGEC said.
In the announcement on Saturday, Senior Minister in the Office of the President with Responsibility for Finance, Dr Ashni Singh, had said that gas prices at the pump charged by GuyOil would be reduced from $269 per litre to $215 per litre.
Additionally, diesel prices were reduced by 15 per cent from $265 per litre to $225 per litre. These changes, according to the Minister, are expected to start taking effect as early as 2 October 2022.
Dr Singh explained that during the first half of 2022, global oil prices surged more than 50 per cent, increasing from US$77 per barrel at the end December 2021 to US$120 in June of this year. In fact, oil prices rose as high as US$137 per barrel primarily as a result of the Russian invasion of Ukraine.
“The impact of the dramatic increases in oil prices were significant and given the interconnected nature of the global economy, translated into higher cost of landing fuel in Guyana. In order to mitigate the impact of rising global fuel prices on domestic consumers and the productive sectors to which fuel is a key input, the Government lowered the Excise Tax rate on both gasoline and diesel from 10 per cent to 0 per cent in March of this year.”
“It would be recalled that, previously, during the Budget 2022 presentation, the Government lowered the Excise Tax on both gasoline and diesel from 20 per cent to 10 per cent so as to minimise the impact of rising global oil prices,” the Minister further explained.
Over a period of time, the Government has been progressively lowering the Excise Tax rate on both gasoline and diesel, from 50 per cent to 35 per cent in February 2021, then from 35 per cent to 20 per cent in October 2021. This is in keeping with Government’s policy to adjust the taxes on fuel, to mitigate the impact of rising fuel prices on the world market.