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Move to save consumers $43 million

PORT MORESBY, Papua New Guinea (PNG Post-Courier, July 13, 2008) – Papua New Guinean motorists and boat owners will see a reduction of fuel prices come September 1, Acting Prime Minister Dr Puka Temu announced in Parliament yesterday.

Dr Puka Temu yesterday took pride on behalf of the Government in announcing the significant reduction of excise tax rate on fuel products which will cut the price of fuel considerably.

Dr Puka Temu said that this will make Papua New Guinea’s taxation of fuel extremely low by international standards.

"From September 1, the excise rate on diesel fuel will be halved, from six toea to three toea per litre, the excise rate on unleaded petrol will be cut by one-third, from 61 toea to 40 toea per litre and the excise tax on zoom will be abolished completely, from 31 toea per litre to zero," Dr Puka Temu announced.

The combined result of the lower fuel pricing formula and cuts to the excise tax will result in significantly lower prices at the fuel pump.

As of September 1:

* The price of diesel will be around 14 toea per litre cheaper than it would otherwise be

* The price of unleaded will be around 39 toea cheaper and

* The price of kerosene to be around five toea cheaper.

"Eliminating the excise tax on zoom will be of particular assistance to those who use small boats for transportation and fishing in our rural areas. Reducing the excise on diesel will help PMV drivers, transport companies and those who run power generators. And reducing the excise on petrol will help all those drivers who dread having to fill up at the petrol station.

"The Government has also been working with key stakeholders, to see if there is another way that the price of fuel at the pump can be minimised," he said.

"In particular, the Government is negotiating an agreement with InterOil in relation to the pricing formula to be applied to petrol, diesel and kerosene.

"The negotiations to date will result in the price of fuel being significantly lower than would otherwise have been the case. In case of the price of diesel increasing to K4.30 per litre in July – as it otherwise would have due to higher oil prices – the price will now only rise to K4.19, representing a saving to consumers of 11 toea per litre.

Similarly the petrol price would have been K4.38 per litre, but following the State’s negotiations, it is K4.20 a saving of 18 toea. Finally, the price of kerosene has been reduced from K4.06 per litre to K4.01.

"If the price of oil continues to increase at the rates that it has over the first half of the year, these actions will not necessarily result in an absolute reduction in the price of fuel at the pump. However, they will mean that prices will be lower than they otherwise would have been and will translate into an approximate annual saving to PNG households and businesses of more than PGK110 million [US$43.3 million].

Papua New Guinea Post-Courier:

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