In an attempt to lower fuel prices, the economic affairs ministry has removed five components of the price-fixing module and introduced a fixed commission for fuel dealers.
In 2016 a multi-sectoral committee developed a domestic pricing structure for Bhutan after fuel entered Bhutan which had around 11 components. The dealers’ commission, transit insurance, return on working capital, operating cost, product loss, transportation rates and other charges.
Economic Affairs Minister Loknath Sharma said that the pressure from dealers and transporters increased due to increasing transportation costs and inflation over the years.
Lyonpo said the ministry recently tried to simulate different scenarios on this pricing and adopted a new one removing five components and fixing the dealer’s commission as is practised elsewhere as a fixed rate.
Earlier, the dealer’s commission was kept in percentage, which means if the fuel price increases and the volume of fuel consumption increases the commission also increased.
Lyonpo said that the recent pricing implemented from June 1 directly benefitted the public and the price of diesel decreased by Nu 1.13 and petrol by Nu 1.91 in Thimphu, though dealers suffered that cut.
From India, the fuel price of petrol increased by Nu 2.3 and diesel decreased by Nu 6.4 per litre.
The overall decrease in Thimphu of diesel is Nu 8.33 and petrol increased only by Nu 0.79 owing to change in domestic pricing which otherwise would have been more by Nu 1.13 and Nu 1.91 respectively.
During the question-answer session at the National Assembly yesterday, the Bomdeling-Jamkhar, Member of Parliament (MP), Dupthob asked the Prime Minister what measures were taken to reduce fuel prices.
He said the prices have soared three times recently. “In earlier times, the prices used to be lower here, but now the fuel prices are higher by Nu 10 here,” the MP said.
Responding to the question, Lyonchhen Dr Lotay Tshering said that the government does not have authority to decrease the fuel price as it is dealt with by the Public Sector Undertakings (PSU) in India and dealers in the country.
Lyonchhen said that recently the price decrease was attributed to the revision of the domestic fuel price module 2016 and the price decrease in India.
“The dealer’s commission has been reduced,” Lyonchhen said.
Lyonchhen said that the government has two options in reducing the fuel price by giving subsidies and waiving the 10 percent taxes.
Lyonchhen mentioned as per research some countries are even paying Nu 160 to Nu 170 a litre for diesel and there are some countries paying Nu 60 to Nu 70 a litre for diesel. “Whereas we pay around Nu 100 to Nu 110 a litre.”
In India, the fuel prices range from Nu 90 to Nu 100 per litre depending on the state.
Lyonchhen said that for those countries that pay Nu 70 per litre, their economy is doing badly and for those paying Nu 100 and above their economy is doing better.
Lyonchhen said that the government can subsidize prices for five to 10 years but the economy will not grow.” There is not much revenue to earn in the country.”
Most imports are food items and there are few exports of boulders, mines and minerals.
“Our plan is not to subsidise the fuel, we want to grow the economy in the country which the people can afford to pay for the fuel,” Lyonchhen said.
Lyonpo Loknath Sharma said that the PoL dealers in the country have been very cooperative and understanding of this new pricing module though it has a direct impact on their business.