Saturday, December 20, 2014

Gambia: Fuel subsidy removed but who will pay ?

The Gambian Finance Minister informed the National Assembly yesterday that the regime was going to levy a D 1.00 tax on every liter of petrol bought at the pump, representing the subsidy on petrol and petroleum products that was being lifted effective January 1st 2015.  

He was quick to add that it will not be the motorists/consumers who will be paying the extra dalasi. So, the question then becomes if its is not the consumer is going to pay then who will? The importers? The retailers? 

The Minister tried answering his our question in the next sentence by implying that it is an importers tax that should not be transferred to the consumer.  He reasoned that since importers have been enjoying a windfall since the world market price has been tumbling - from $115 per barrel in June this year to $70 today -  without being reflected in the form of lower pump price for the consumer.  In other words, the 40% price differential was being pocketed by importers, as it has always been the case. 

But who are these importers?  We'll let the Minister ponder over the question. From what we know of the domestic petroleum market, the importers are not likely to take the hit. They will pass every butut to the motorists and transport owners who in turn will shift some of the cost to the users of public transport. 

Has anyone ever seen petrol pump prices go down in The Gambia as they do in the West when there's an oil glut?  If you or someone you know have experienced it, we'd like to know. I think the Minister was trying to be too clever by a half on this one.