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St Kitts examining new pricing system for LPG

Published:Thursday | April 5, 2012 | 12:00 AM

The St Kitts-Nevis government says it is examining the possibility of implementing a new pricing system for the sale of liquid petroleum gas (LPG) after indicating that the present mechanism is responsible for "an artificially higher price than necessary for the commodity".

Information Minister Nigel Carty said that the government is considering whether to use the Mont Belview System instead of the Mean Caribbean Posting used as a benchmark for the standardisation of the pricing of cooking gas imported into the twin-island Federation.

He said the Cabinet had 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.

A comparison of the prices for the commodity among the two major suppliers show a variation as high as 32 per cent, with the government subsidy being as much as EC$33.58 (US$12.43) on each 20-pound cylinder and EC$136.00 (US$50.30) on each 100-pound cylinder of gas, the minister said.

He described the subsidy as "quite significant" totalling five million (US$1.85 million) last year.

Carty said that the importation, distribution and pricing of LPG is governed by the Price of Goods Act that 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.

"In fact, despite the rapid increases in the costs associated with the importation of cooking gas over the last seven years, the price of cooking gas has remained stable since 2005 as a result of the application of the Price of Goods Act," Carty said.

But he noted that a report submitted to the Cabinet by Prime Minister and Minister of Finance Dr Denzil Douglas indicated that the Mean Caribbean Posting index mechanism "is too arbitrary, leading to an artificially higher price than necessary for the commodity".