Fiji: Statement On Increase Of Domestic Fuel Price
Statement by the Minister for Finance on increase in the domestic price of fuel
6 August 2008 - Following the announcement made yesterday (Wednesday 6th August 2008) by the Prices and Incomes Board regarding the increase in the domestic price of fuel, the Ministry of Finance, National Planning and the Sugar Industry feels it necessary to assure the Public that while it appears that the price of fuel in Fiji is going up when world prices are decreasing, this comparison is in fact distorted.
Reports that the world price of crude oil is decreasing are correct, however it is important to remember that Fiji imports refined fuel products (unleaded petrol, diesel, kerosene etc.) and not crude oil. As a result of the refining process the world price of these refined products is higher than the world price of crude oil. Domestic prices implemented trail with a 2 month lag or delay, so the price adjustments made for the months of July and August will reflect world prices prevalent in May and June, which were the highest on record.
The large price increase effective from today relates to the fact that two price reviews (July and August) have been implemented at once. The July price increase was absorbed by the oil companies at a loss to them. This had to be passed on to the consumer from August together with the price increase for that month.
If current indications persist as to the downward movement of the world price of crude oil, then it is possible that the domestic price of fuel may fall to some extent by as early as October this year.
In spite of the recent increase in domestic prices, when comparing our fuel price to that of other Pacific Island Countries, Fiji is clearly better off. For example, the current price in Fiji for unleaded petrol is F$2.44 and for diesel is $2.39, while the equivalent prices in Tonga for the same products are F$2.71 and $3.04 respectively.
Government is aware of the hardship that will be experienced throughout the economy due to these increases in price and is currently considering relief measures, which include a possible reduction in fuel duty, to be discussed in the next Cabinet meeting on Tuesday 12 August 2008. Given Government's support package for the bus industry, claims from taxi and minibus operators for fare increases should be seriously considered by the LTA.
Government will continue to attempt to mitigate the negative effects of these rising prices. However, due to Fiji's dependence on imported mineral fuel products we will remain vulnerable to movements in the world market.
Mahendra P. Chaudhry
Minister of Finance, National Planning,Sugar Industry and Public Utilities