Minister of Science, Technology, Energy and Mining (STEM), Hon. Phillip Paulwell, says the pricing mechanism used by the state-owned oil refinery, Petrojam, is the best method for calculating product prices.
“There is a priority pricing formulation that enables Jamaica to maintain a deregulated energy sector, which allows for Petrojam to compete effectively with possible imports from external sources and the Gulf reference price is the best formula for determining its own refinery prices and we intend to continue in that way,” the Minister told JIS News on March 16, following a meeting in Kingston with petroleum stakeholders to discuss the rise in the cost of petroleum products.
Mr. Paulwell; State Minister in the Ministry, Hon. Julian Robinson; and Minister of Industry, Investment and Commerce, Hon. Anthony Hylton, led the discussions with representatives of the Jamaica Gasolene Retailers Association (JGRA) and members of the various organisations of taxi operators.
Chief among the topics discussed was a proposal by the JGRA for a cap on the ad valorem tax on petroleum products.
“They are recommending that it be capped at US$90 per barrel, and we intend to review that. They have also raised the matter of the heat rate and the losses that they incur from evaporation of fuels. The Minister of Industry has committed to review that matter,” Mr. Paulwell said.
He informed that the taxi operators have put forward proposals for the amendment of the motor vehicle policy and incentives to be provided for vehicles that will enable them to update their fleet to hybrid vehicles.
“We have committed to all the players that we will return here in three weeks to give them a response from the Government in relation to the specific matters that are before us,” the Minister said.
For his part, Managing Director of Petrojam, Winston Watson, said the refinery’s pricing policyis based “on the least cost option of supplying products to the Jamaican market."
He reiterated that the US Gulf Coast is a proper pricing reference for Jamaica for several reasons, including transparency.
“All our suppliers use that; everybody in this region use that (reference price). It is a very transparent market reference, and it cannot be manipulated by any one player; it is very open. That is what we use to ensure that our price is a good and competitive price,” Mr. Watson said.
In the meantime, Minister Paulwell informed that the Government will continue to implement measures to ensure that the consumers receive the best possible price. These include the upgrading of Petrojam; and conducting public education campaigns on conservation efforts.
By Chris Patterson, JIS Reporter