TAXES, LOGISTICS PUMP UP VANUATU FUEL PRICES

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By Shirley Joy

PORT VILA, Vanuatu (Vanuatu Daily Post, March 30) – One of the major contributing factors of the high cost of fuel is the supply of fuel through intermediate depots before reaching Vanuatu, and also low demand and lack of infrastructure capacity to accommodate larger volume of petroleum products.

This was revealed at the Shefa Provincial Business Forum by Shefa Land Transport Association representative Joseph Dick who explained that the cost of fuel at wholesale prices was about 60 percent of cost component. However, he said, government taxes, plus a Value Added Tax of 12.5 percent make up 35 to 40 percent of the total cost of fuel in Vanuatu.

According to Mr Dick, retail prices of fuel from 2000 to 2004 have increased by approximately 25 to 39 percent.

The year 2002 and 2004 showed a downfall in the price of fuel specifically for diesel and gasoline. However, kerosene has maintained a steady increase. Since 2004, the price of diesel and gasoline have increased by almost 50 percent to the current prices. Over the last five years, prices of fuel have increased by 3 to 5 percent on average annually. Reporting on the impact of the increase in the price of fuel, Mr Dick said fixed prices for bus remain unchanged since the endorsement of the fare levying system by Order no. 19 of 1995 by the Ministry of Internal Affairs and this affects the transport services by diverting to shorter routes, and also causes changes in behavior of bus drivers. It also affects the driver’s wages, and additional cost to repair and maintain service, reduction in the volume of fuel imported each year, and has greater impact on the operations of fuel companies.

Meanwhile, the formulation of a Petroleum Act that would provide for investment into the scientific advancement of renewable energy resources and alternative fuel sources such as coco-bio fuels was recommended to the Forum.

April 3, 2006

Vanuatu Daily Post: http://www.vanuatudaily.com

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