Budget passes in HOR; no laws breached in gas price increase

Larry Howai: "...the subsidy on premium gasoline at present is $1.16 a litre."

The House of Representatives on Wednesday passed the 2013 budget after a final contribution by Finance Minister Larry Howai who made it clear that the government did not break any law when it increased the price of premium gas from $4.00 a litre to $5.75 a litre.

Opposition MP Colm Imbert had suggested in his budget contribution that the government broke the law by raising the price of premium gasoline.

Howai told legislators according there was no breach in the Petroleum Levy and Subsidy Act.

"Mr Speaker, I have received the opinion of attorneys from the Ministry of Energy and Energy Affairs and I wish to state categorically that there has been no breach," Howai said, to desk-thumping from the Government benches.

"That act always operated and continues to operate as intended to provide the mechanisms to fund the subsidy on petroleum products, collect the levy from oil companies that is used to offset the subsidy...monies utilised go toward the subsidy payments on petroleum products.

"There is no distinction made between the individual subsidy amounts on the various fuels in the law as regard the applications of the levies collected...for over a decade now the amount of money paid by oil companies as a levy has been insufficient to cover the subsidy on transportation fuels".

"The estimated total subsidy claimed for fiscal 2012 is $4.41 billion and the total levy payments for 2012 is estimated at $668 million, which is only 15 per cent of the total subsidy claims...

"This would result in an estimated total government subsidy liability for fiscal 2012 of approximately $3.74 billion or 85 per cent of the total subsidy claims. In summary, Mr Speaker, the levy is woefully insufficient to cover the subsidy. The difference is a liability which is met by the Government." 

Howai said the figures quoted by Imbert were wrong. "The true market price of premium gasoline will be approximately $7 or $8 a litre, including VAT (Value Added Tax). This means that the subsidy on premium gasoline at present is $1.16 a litre. This means the Government continues to subsidise premium gasoline," Howai said.