Increase in Price of Petrol : a Domino Effect Looms Large 

The new petrol price has left the Mauritian people astounded. As from Wednesday, the petrol price has risen to Rs 52 per litre and the diesel price is now at Rs 41.90. In a span of 16 months, the prices for gasoline and diesel have taken an upward trend four times. The price of petrol was previously maintained at Rs 47.30 since 21st December 2017 while diesel was at Rs 38.10.

The Petroleum Pricing Committee, which met on Tuesday, justified the price hike because of rising international prices. According to the international press, two reasons contributed to this increase. First is the decision of the US to withdraw from an agreement with Iran on nuclear and sanctions imposed on the country. On the other hand, Saudi Arabia, the world’s largest oil producer, is willing to impose a price of $80 per barrel.

Mauritius could not escape from this new development. Besides, the appreciation of the US dollar against the Mauritian rupee between 13th April and 15th May complicated an already precarious situation. According to the data available on the website of the State Trading Corporation, there has been a 2.8% appreciation during this period, arriving at an exchange rate (at the time of purchase) of Rs 35.15.

The Price Stabilisation Account (PSA), which was negative by Rs 333 million, as stated in the press release of 20 December 2017, still shows a deficit of Rs 230.4 million on 15 May 2018 despite the increase in retail prices on 21 December 2017. 

An inevitable increase

According to the economist Pramod Jaddoo, the increase was inevitable and Mauritius could not do otherwise as the international market price has known an increase. “It is quite normal if price increases at global market, we have to adjust. We are highly dependent on imports. We do not have much choice left.” 

The economist believes that at this time, Mauritius needs to prepare itself from the domino effect. “There is no doubt that this increase will impact on our transport sector and can result in an increase also. The government also cannot continue to subsidise the transport as in the long term; it can represent a burden for the government. If price increases, it will be the most vulnerable of the society who will suffer.” He asks the government not to increase the price of the transport immediately. 

Similarly, the President of the Association for the Protection of the Environment and Consumers (Apec), Suttyhudeo Tengur, argues that the increase is inevitable if we take into account the increase of petrol per barrel on the world market, which is currently at US$ 80 but may rise up to 90 US$.

“This increase of Rs 4.70 per litre of mogas and Rs 3.80 per litre of gasoil is too high. When the price per barrel hit a world record of 140 US$ in April 2008 at a time when there was a starting economic crisis, the price of mogas was in July 2008 Rs 49.50 per litre. Now that the price per barrel is 50$ lesser, I do not find this increase justifiable. But one argument that the increase could be lesser would only need a courageous political decision to reduce the number of duties and levies on petroleum products on their landed cost.” 

Petrol retailers want higher profit margin

The Petrol Retailers Association (PRA) is calling for a rise in profit margin from sale of fuel. The Association, which regroups about 150 filling station operators, met the Prime Minister on Thursday morning who accepted the request of reviewing the profit margin. Bhim Sunassee, the president of the PRA, hopes that the quantum will be decided by next week. The current profit margin is Rs 1.79 on a litre of diesel and Rs 1.83 on a litre of petrol. He says that these rates are not sufficient to cover increasing cost of living and operating costs.

Ashit Gungah : “We are in a difficult situation”

The Minister of Commerce, Ashit Gungah, stated that we are in a difficult situation and everyone should collaborate. He made an appeal to the population and economic operators to act as patriots.

Xavier-Luc Duval : “Unjustified increase” 

The Leader of the Opposition, Xavier-Luc Duval, finds the rise in fuel prices as unjustified. According to the opposition leader, the Prime Minister is imposing taxes to withdraw money from the consumers to cater for the upcoming budget.

Suttyhudeo Tengur : “A negative impact on consumers” 

Suttyhudeo Tengur recalls that the increase in the price will have a negative impact on the purse of the consumers. “These increases will also have far reaching effects, like a possible increase of bus fares, the rates charged by taxis, the running cost of any vehicle and most probably on electricity bills. We should not forget that our economic development is essentially based on energy. Therefore any increase in the cost of energy will have a direct bearing on the economic development.”

He underscores that this might lead to a reduction in consumption, as the consumer will have to redefine the priorities of his family budget with lesser expenses on essentials. 

Sunil Jeewoonarain : “Drastic decision if no solution found” 

The secretary of Mauritius Bus Owners Cooperative Federation, Sunil Jeewoonarain, states that the increase of gasoline and diesel will surely have an impact on the transport system.

“First of all, it is the government that sets the price of the bus ticket. When the government calculates this price, it takes into account the operation cost, including the price of fuel. It represents about 35% of our expenses. As a result, a change in the price of diesel has a direct impact on our operating costs.”

In case, the government is not ready to give subsidies or increase the price, the bus owners will have to take drastic decisions, says the secretary. “Bus owners will have the choice to remove their buses on routes which are not profitable or isolated. They can also refuse to operate early or late schedules. This will obviously bring an unstable situation and the quality of the service will not be the same.”