The fuel dealers in the country proposed to the government the removal of five percent green tax and depot surcharge to reduce the fuel price and to re-instant the five components that the government has removed.
In new pricing module, MoEA has removed five components, which include working capital, product loss, financial cost, operating cost, and transit insurance.
The dealers, Bhutan Oil Distributor (BOD), Damchen Petrol Distributor, Druk Petroleum Limited, and State Trading Corporation of Bhutan Limited (STCBL), presented their challenges and way forward with the fuel pricing committee.
The dealers have raised that the government is imposing a double green tax on fuel and while buying vehicles customers also pay 10 percent green tax. Dealers are not aware on what basis the depot surcharge is being imposed.
The general manager (GM) of Bhutan Petroleum division under STCBL, Sugan Pradhan, said that since there is double taxation on green tax, ministry should either remove green tax or it should charged a nominal rate.
The five percent tax green tax is imposed for every 1,000 litres of fuel price.
“Whether the cost of fuel is Nu 1 or Nu 200 the amount of pollution produced is the same,” GM said.
He also said that the government should also do away with the depot surcharge.
“The government should provide facilities and services to the dealers to store the fuel,” he said.
He said that the depot at Thingchupangkha was constructed as a Government of India PTA project at Nu 218.56M and that the cost must have already been recovered by the dealers.
The government charges Nu 600 for every 1,000 litres of petrol and Nu 500 for every 1,000 litres of diesel as a depot surcharge.
If the government removes green tax and depot surcharge, the petrol price would decrease by around Nu 5 in Thimphu at the current invoice price. At the current price of Nu 100.43, Nu 4.37 per litre and Nu 0.6 per litre as green tax and depot surcharge, respectively.
Similarly, for diesel, it would decrease by around Nu 5.76 in Thimphu. At the current price of Nu 120.6, Nu 5.76 per litre and Nu 0.5 per litre as green tax and depot surcharge, respectively.
Sugan said that the government should consider transit insurance as dealers insured tankers and outlets.
He said that the government should also consider shrinkage loss, adding that with the rise in temperature and global warming amount of shrinkage loss is more.
From every 1,000 litres, around 180litres will be lost from shrinkage while transporting.
The general manager said that in the month of June STCBL incurred a loss of Nu 3.47M. “We have to sell at a loss of Nu 2.36 per litre.”
The general manager of Damchen Petrol Distributor, Karma Yonten, said that if the government removed the green tax it would benefit both the consumers and fuel dealers.
Meanwhile, the fuel pricing committee is reviewing the proposal. The final recommendations will be submitted to the minister for economic affairs and the secretary.
It was learnt that the government will sign the memorandum of understanding on PoL products between the ministry of economic affairs and the ministry of petroleum and natural gas of India.