“The fuel market should now be liberalised.” 

It’s in this vein that government has taken a decision that all gas stations owned by the National Petroleum Marketing Company, NP, will be offered for sale to the private sector.

The measure, announced by Finance Minister Colm Imbert during his budget presentation, signifies an end to 46 years of fuel subsidies from the State.

According to the Finance Minister, over the last 14 years alone, government spent $25billion in fuel subsidies. 

“We have analyzed the subsidy impact on the national community and we have formed judgment that not only did the subsidies disproportionately benefit the higher income groups, but the usage was from an economy-wide perspective,” the Finance Minister said.

“Under this arrangement,” he explained, “the fixed retail margins  for all liquid petroleum projects will be removed. Petroleum retailers and dealers will now be allowed to fix their own margins. Wholesale margins will remain fixed for the time being and an appropriate but reasonable tax introduced to compensate for the current fuel surplus that is generated on the sale of gasoline because of depressed oil prices,” He explained. 

What does it mean for prices at the pump?

According to Finance Minister, the impact 

“The net result should be little or no increase in the price of motor fuels at current oil prices.”

He cautioned, however, that if the price of oil recovers, the price of gasoline and diesel will “naturally increase proportionately”.

First preference for sale of NP locations will be given to existing dealers and concessionaires.

The new liberal market will be introduced in January 2021.