Economic Policy: Fuel Price Decrease Sparks Election Campaign Debate

The promise to lower fuel prices has become a key highlight of the Alliance for Change’s electoral campaign, which was officially announced on May 1 by Navin Ramgoolam. This commitment is featured prominently in the coalition’s electoral manifesto.

In response to this announcement and Ramgoolam’s declaration that his government would cover the 14th month salary, current Prime Minister Pravind Jugnauth and his Minister of Finance have also made headlines by pledging a reduction in the prices of petrol and diesel—something the public has been demanding.

Recently, a photo circulating on social media suggested that the Alliance for Change is intending to reduce petrol prices to Rs 46 and diesel prices to Rs 43.

However, Reza Uteem, a member of the economic commission of the Mouvement Militant Mauricien (MMM), refuted this claim, stating, “This information is false.

Many people are telling me that the Alliance for Change will implement a Rs 20 reduction on these products.”

The leaders of the alliance are currently waiting to gather all necessary data before announcing an exact figure for the price reductions.

Experts assessed that a decrease in fuel prices is achievable, pointing out that the outgoing government heavily relies on fuel taxes to fund the Consolidated Fund.

“This fund won’t require tax support from fuel sales if the economy is strong.

Therefore, it will be straightforward to eliminate some levies and taxes to reduce petrol and diesel prices by Rs 10 to 15, or even more,” one expert noted.

They also highlighted that international crude oil prices have been falling due to geopolitical tensions, noting that on November 5, the price was $75.65 per barrel, down from $91.20 in April.

The expert added, “There hasn’t been an escalation in tensions between Israel and Iran.

Additionally, the conclusion of the electoral campaign in the United States is expected to bring stability to oil prices in the international market.

As of Wednesday, prices were at $72, and the decline is anticipated to continue.”

Consumers currently face double taxation on every liter of fuel. For petrol, the taxes amount to Rs 22.10 per liter, plus an additional Rs 3.30 in value-added tax (VAT).

For diesel, taxes total Rs 21.88, with consumers paying Rs 3.28 in VAT.

Uteem advocated for more than just the elimination of levies, insisting that a comprehensive reevaluation of the entire fuel pricing structure is necessary.

“We need to reassess the way contracts are allocated,” he remarked, emphasizing the political interference involved in contract granting.

Uteem asserted that “there are numerous intermediaries profiting through commissions.”

He proposed that if these commissions and intermediaries were removed, the State Trading Corporation (STC) would be able to purchase fuel at lower prices, leading to reduced costs for consumers.

Uteem also suggested revisiting contracts related to insurance, freight, and cargo to minimize expenses further.

Source: l’Express