Government to discuss fairer pricing system for cooking gas with suppliers
BASSETERRE,ST. KITTS, APRIL 2ND 2012 (CUOPM) – The Cabinet of the Government of St. Kitts and Nevis has expressed a resolve to engage suppliers of cooking gas to investigate whether a fairer pricing system, namely the Mont Belvieu System instead of the Mean Caribbean Posting, should be used as a benchmark for the standardization of the pricing of cooking gas imported into the twin-island Federation.
Minister of Information, Sen. the Hon. Nigel Carty disclosed on Friday that at last week’s Cabinet Meeting, it was agreed that the practice of offsetting taxes due by the suppliers against government transfers to the suppliers will be discontinued in order to improve transparency and accountability in government’s tax collection policy.
Mr. Carty in the post Cabinet Briefing noted that the importation, distribution and pricing ofLPG or cooking gas in St. Kitts and Nevis is governed by the Price of Goods Act, Cap. 18.09 of the laws of the Federation. The Price of Goods Act is intended to give government reasonable control over the pricing and the supply of certain basic and important commodities to protect consumers from the arbitrary and market-driven pricing schemes regulated by the economic principles of supply and demand.
“In fact, despite the rapid increases in the costs associated with the importation of cooking gas over the last 7 years, the price of cooking gas has remained stable since 2005 as a result of the application of the Price of Goods Act,” said Minister Carty.
He said in a report brought before the Cabinet by the Hon. Minister of Finance and Prime Minister, the Right Hon. Dr. Denzil L. Douglas, it was observed that the mechanism for the pricing of cooking gas, namely the Mean Caribbean Posting (MCP) index, was too arbitrary, leading to an artificially higher price than necessary for the commodity.
“It was further reported that between the two major suppliers of cooking gas, Delta and Sol, the price of the commodity varied significantly with poor justification.
Worthy of note, the prices identified by the two companies varied by as much 32% in May of last year, 2011,” disclosed Mr. Carty, who further pointed out that prices for the 20lb cylinder were calculated at $48.00 for one company and at $63.58 for the other. The prices established for the 100lb cylinder of cooking gas were $230.00 and $276.26respectively for the two companies.
He further stated that since government has fixed the price of cooking gas at $30 for the 20 lb tank and at $140 for the 100lb tank, government’s subsidy has been calculated to be as much as $33.58 on each 20lbtank of gas and $136.00 on each 100lb tank of gas, sold to consumers. This subsidy is quite significant and totaled around $5 million for the year 2011.