Guyoil, GPL hog windfall profits – Jagdeo

Plummeting oil prices

– Govt to “consider” reduction

Opposition Leader Bharrat Jagdeo has noted with great concern the fact that the Guyana Oil Company (Guyoil) and the Guyana Power and Light Inc (GPL) have both been cashing in on mega profits worth over US$200 million collectively, as a result of purchasing extremely cheaper fuel between the years 2014 to 2015, while the ordinary citizens continue to bear the brunt of exorbitant prices for fuel and electricity.

Finance Minister Winston Jordan

Opposition Leader Bharrat Jagdeo

Calls continue to mount on Government to significantly slash these prices, particularly in light of the prevailingly low oil prices on the global market.
Oil has steadied at a still-low US$31 per barrel, with no increase in sight. This is a devastating blow for oil producers worldwide but a priceless opportunity for consumers around the globe who are cashing in on huge savings; with the exception of Guyana.
During a press conference on Wednesday, Jagdeo explained that the “non-reduction” of the prices at the pump stations has led to a huge windfall in profits, at the expenses of Guyanese populace. He posited that usually, when oil prices are significantly low on the global market, government would lower the prices at the State-owned Guyoil to ensure the market follows.
Similarly with GPL, Jagdeo highlighted electricity prices should have tumbled already.
“Because when your oil is now US$27 a barrel and it was US$115 in the past then…oil is the biggest component of cost, then the prices should have come down significantly,” he pointed out.
Moreover, the Opposition Leader explained that those reductions could have been a huge stimulus to the economy.
“The consumers would have more disposable income. Secondly, if we allowed the prices to be adjusted, we would have given a big stimulus to the business community, miners, manufacturers, etc… we have missed a huge opportunity,” he stated.
Last year’s mid-year economic report showed Government has been raking in mega-revenues as a result of the falling international oil prices and not passing on the savings to consumers and businesses.
The report explained that although less fuel was imported, Guyoil made a profit of $1.7 billion as opposed to a loss of $0.9 billion in the comparable half-year of 2014.
This means Guyoil took in $2.6 billion that could have ended up in the pockets of Guyanese vehicle owners. This would have been pumped into the economy in consumer spending, creating a virtuous cycle as a stimulus for other business activities.
Guyana imports approximately 10,000 barrels of oil daily. Today, with prices as low as US$30 per barrel compared to last year when the country was paying over US$100 per barrel, Guyana is saving around US$700,000 (GY$140,000,000) every day.

Budget
Moreover, Jagdeo contended that fuel and electricity reductions ought not to be announced as a budgetary measure.
“We don’t want the reduction in electricity rates and fuel rates to be a part of a budget measure. That cannot be a budget measure, that’s ongoing so the huge savings that the country has seen…we want to see the benefits passed on in an ongoing way, not to wait at a once in a year event around the budget because if that becomes the reality, then when there is need for adjustments downwards, people would start expecting that that should only happen at budget time,” he explained.

Government’s response
Meanwhile, Finance Minister Winston Jordan told media operatives that Government might consider the cries for the lowering of fuel and electricity prices.
On the other hand, Business Minister Dominic Gaskin, when prompted on Government’s non-action towards the global trend, explained that stability was better than short-term benefits.

“I think stability is more important than short-term gains and losses… In other words, rather than us reacting every time there is a drop or rise in fuel prices, I think from a long-term outlook, stability is preferable,” Minister Gaskin stated.

Calls for reduction
The Private Sector Commission (PSC) and former Tourism, Industry and Commerce Minister Irfaan Ali had both called on Government to lower the fuel and electricity prices.
The Commission also noted that the reductions would provide the much-needed stimulus for the recovery of the sluggish economy, which was still reeling from the effects of the elections-induced slowdown.
The PSC explained that if urgent action was not taken, imports would eventually be drastically cheaper on the local markets and certain local production would diminish