Removal of subsidy seen as a setback to operators
The productive and transport sectors will be dealt a fresh blow to their cost of doing business from next month.
From April 1, it is going to cost more to fill up with diesel at the pump for the Transport Board and privately run public service vehicles. Manufacturers, fishermen and farmers, whose key machinery depend on the use of diesel, will also have to pay more for the commodity.
That is because the diesel subsidy to the public transport industry, which was established nearly six years ago as a price offset and excise tax waiver, will be discontinued.
The Ministry of Energy said in a statement today that PSVs and the state-operated Transport Board would now have to buy diesel, inclusive of excise tax. In addition, the board will no longer be used as a fuelling facility for PSVs.
Meanwhile, the ministry has pointed out that the excise tax waiver, which is applicable to manufacturers, farmers and fishermen will remain in place. It noted that the diesel subsidy was established by Cabinet on May 22, 2008, as a shield for the productive and transport sectors.
This subsidy included a waiver of excise tax and a price offset of 7.906 cents per litre, which took effect from June 1, 2008. It was then decided that a price offset of 23.180 cents per litre should also be given to manufacturers, farmers and fishermen.
The ministry also observed that since the introduction of the price offset and the excise tax waiver for the transport sector, bus fare has increased from $1.50 to $2.00 per trip.
At least one farmer, who had earlier been forced to send home staff due to the current economic challenges, fears that the effected price increase would mean further layoffs at his farm.
John Mark Cozier, the owner of Market Hill Farms in St George told Barbados TODAY his mechanically-driven dairy farm operations depend largely on the use of diesel for it to be viable. Cozier also lamented that he was still assessing the extent of the out-of-pocket cash which would be brought on by the increase in diesel price.
He said the discontinuation of the subsidy would mean a second blow to his “bottom line” because he is now out by $18,000 in unpaid government rebates for cutting and baling and raking on his farm.
Cozier was informed of the Government decision to stop the diesel subsidy in a letter from his supplier, Rubis West Indies, dated March 4, 2014.
The letter, which is signed by accounts executive Imran Phillips, reads: “Please be advised that we have received notification from the Energy Division in the Prime Minister’s Office, that Cabinet at its meeting held on January 30th, 2014, agreed that the subsidy on diesel should be discontinued from April 1, 2014.
“As a result of Government’s decision, the current diesel rebates of Bds 0.2318 cents per litre, will cease effective 1 April 2014.
“Please feel free to contact the undersigned . . . for further information.”
When contacted, Phillips confirmed the contents of the letter and his company’s association with it. In reaction, spokesman for the PSVs Morris Lee told Barbados TODAY, he was planning a press conference some time tomorrow to address the subsidy issue, while president
of the Barbados National Union of Fisherfolk Organisations Vernell Nicholls said [up to today] she had not received any official notification and would only comment when that happens.
Neither executive director of the Barbados Manufacturers Association Bobby McKay nor chief executive officer of the Barbados Agricultural Society, James Paul could not be reached for comment.