Fuel price hike raises con­cerns

Business Bhutan - - Money - Tsh­er­ing from Thim­phu

The price of fuel have in­creased over 21 times since the ef­fects of the Goods and Ser­vices Tax in In­dia im­pacted Bhutanese con­sumers in Novem­ber last year. There have been con­tin­u­ous hikes in the fuel price in In­dia, which re­sulted in hikes in Bhutan.

Since May this year, fuel prices rose by al­most Nu 10. In the past one month, petrol rates have hiked up by nearly Nu 3, and diesel by nearly Nu 4.

A liter of petrol now costs Nu 70.91and diesel Nu 69.42 in the cap­i­tal. These are the high­est rates since July 2014.

Do­phu Dukpa, a taxi driver said fuel prices are ris­ing ev­ery week which makes it dif­fi­cult to fix taxi fare as pas­sen­gers are not will­ing to pay higher rates.“We can’t in­crease the taxi fare as we will be pe­nal­ized by the RSTA and go­ing long dis­tance is okay but short routes causes loss.”

Jam­phel Tsh­er­ing, a pri­vate em­ployee said the gov­ern­ment has no con­trol over the fuel hike as fuel comes from In­dia and the low-in­come peo­ple who travel by pri­vate car, bus and taxi are af­fected the most.

Pema Chen­zom, a ho­tel em­ployee said the bus and taxi fares have been con­stantly in­creas­ing and they have to pay as per de­mand.

How­ever, the con­stant in­crease in fuel prices since May have not re­ally im­pacted the in­fla­tion rate. Since reach­ing 2.62% in May, the in­fla­tion rate has dropped to 2.01% in July.

This means that prices of food and non-food items are in­creas­ing at a slower speed. Fig­ures since Au­gust are yet to be re­leased by the Na­tional Statis­tics Bureau (NSB).

Lhendup Dorji, a gov­ern­ment em­ployee said it’s dif­fi­cult to drive around with the rise in fuel price and he has stopped go­ing on rides with friends.

A Thim­phu res­i­dent, Tashi Dendup said there are al­ready ru­mors that in­crease in fuel price will also re­sult in­crease in food price which will have se­vere im­pact on low in­come peo­ple be­cause house­holds spend more than half of their in­come on food and rent and only a tenth on fuel.

An eco­nomic af­fairs min­istry of­fi­cial said it is a chain re­ac­tion that once started will af­fect all. In­crease in fuel price will in­crease the trans­porta­tion cost, in­crease in trans­porta­tion cost will in­crease in price of goods, and this in­crease in price of goods would grad­u­ally force the peo­ple to spend more.

The hike in fuel prices is due to less pro­duc­tion of oil in the Or­ga­ni­za­tion of the Petroleum Ex­port­ing Coun­tries (OPEC) and hike in crude oil price in the in­ter­na­tional mar­ket.

Last Novem­ber, the gov­ern­ment an­nounced a re­duc­tion in petrol price by Nu 10.29 a liter and diesel by Nu 7.75/liter af­ter the Gov­ern­ment of In­dia ex­empted the levy of ex­cise duty on petrol and diesel. The price of petrol was Nu 54.11 a liter and diesel Nu 50.57 a liter on Novem­ber 11 last year.

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