Finance Minister Colm Imbert says when the market is liberalised in less than three months, the Government does not expect price gouging nor the formation of cartels to fix the price of fuel. However, he also admits that fuel prices will go up if the Government achieves its oil price target.
Speaking to journalists after a post-Budget forum hosted by the Trinidad and Tobago Manufacturers’ Association yesterday, Imbert insisted that there will be competition among the dealers and therefore no fixing of prices.
“I am not sure that will happen eh. There are in total around 200 gas stations in the country, I don’t think that will happen and I think there will be sufficient competition. But I am taking note of what you have to say.”
Imbert added: “The dealers and the concessioners will in January set the price from the wholesalers and sell it at a price they think is appropriate. So I think there will be competition; that is why we don’t believe there will be any significant change in the price. Once the price of oil remains the same. We don’t think so.”
In any case, the Finance Minister said the part of the plan that involves the sale of service stations will take some time to be implemented because of the need for transparency.
“The question of liberalisation is now going to occur fairly quickly.
“The question of selling the stations to the private sector will take a while as we wait on transparency, but it’s something we have to look at. It can’t be a free for all,” Imbert said.
On the question of liberalising the wholesale import of fuels, Imbert said the Government was not ready to do that at this stage.
He said: “We did not want to do that just yet. So we thought look, if we liberalise everything, then we could, in fact, have the situation that Mr Williams is talking about. So we thought that we would at least set the refinery price, set the wholesale price and therefore the price fluctuation takes place at the retail end rather throughout the sector.
“No, we want to sell them to the dealers and the concessioners first. I don’t think that will be right. ..We don’t want to put people out of business”
However, Imbert also revealed that should the budgeted price for crude oil of US$45 a barrel be achieved, consumers will be faced with higher fuel prices.
“It makes sense that if the price of oil is now US$40 a barrel and it increases to US$45 a barrel, that it will mean higher prices at the pump.”
During Monday’s Budget, Imbert told the Parliament that since 2006 the fuel subsidy has been provided at great fiscal costs and in the fiscal period 2006 to 2020, the subsidy payments made by Government was in the vicinity of TT$25 billion.
Imbert told the Parliament that the fuel subsidies disproportionately benefit the higher-income groups and their usage was inefficient from an economy-wide perspective.
“In recent times, however, in fact since September 2014, energy prices have declined and are now stabilising at significantly lower levels with the upshot that subsidy payments would be considerably reduced,” Imbert said.
“We are of the view that in the context of the projected international oil prices, the fuel market should be liberalised. Under this arrangement, which is targeted for introduction in January 2021, the fixed retail margins for all liquid petroleum products will be removed; Petroleum retailers and dealers will now be allowed to fix their own margins.”
Imbert said it is expected that the liberalisation will begin on January 1.