Saturday, October 4, 2008

After Massively Creating Poverty, Minister Now Aiming to Kill the Economy

For an open and small economy like Mauritius if there is one concept that we should focus all of our energies on it has to be our competitiveness. Not something Sithanen has on his mind though.

After having made an indecent gift of Rs5 billion to a industry that has been dead for ages, he now seems to want to shut down Mauritius Inc. by not capping how much money government makes on rising fuel prices through VAT.

That's on top of uncompetitive electricity prices that reflect the vested interests of a few rent-seekers and public investments that have declined for three straight years in real terms. Which means that we should expect more misery and trouble until he is shown the exit.


sanjivP said...

The recent quarterly GDP figures released this week by the EU and particularly the successive negative growth in France should send shivers down the spines of our dear leaders. The effects of those slow downs in our main export and tourist markets will appear with some lag, as economists point out. But, isn't it the job of our governement strategists to foresee theses difficulties and start to put in place measures which at best will soften the landing and thus avoid the crash?
Surely, our leaders must think along other dimensions, namely slow growth, current account deficit and a sliding rupee against the USD will bring even more social upheavals, which is not a good augure on the eve of general elections. I believe that the amateurish handling of the states of the country along with their own political survival is extra proof of the ineptitude of our leaders, across the whole potical spectrum.
Or else, some measures are taken very astutely, for the benefits of a few, who ultimately will contibute back to the coffers of politicians.
Anyway, after the Rs 5bn scam, now comes the utter non-transparency of fuel price fixing. But then , this is the result of the deal that saved us money when buying from Mangalore refineries, India!

Samad Ramoly said...

Sanjivp said "fuel price fixing": literally fixing it is, i.e rigging!

Sanjay Jagatsingh said...

Indeed, the supposedly Automatic Pricing Mechanism (APM) is anything but automatic! And it seems that we are being overtaxed and made less competitive to pay, among other things, interest on loans Sithanen has been vigorously taking from the World Bank!

sanjivP said...

Hi All,
The recent fuel price changes is Mauritius is quite against the sway in many other countries. I am including the latest analysis from the Far East:

"Gasoline (l'essence) prices dropped almost $11 a barrel last week to close in Singapore at around $98 a barrel on Friday, driven by sharp declines in global crude prices. Thin trading also squeezed prices as several Asian markets were closed for public holidays last week. In Vietnam, weak domestic demand and high stocks have forced the county to keep imports at the minimum level for nearly two months. Meanwhile, China has skipped its imports and maintained gasoline exports.

Amid tightened supplies in the region, there was some improvement as gasoline stocks in Singapore climbed up from a seven-month low. Gasoline prices in the upcoming week will be strained by weak US demand. The increase in US gasoline stocks will also make arbitrage opportunities to move gasoline out of the region more difficult.

Singapore diesel prices dropped sharply by more than $16 to close the week at around $104 a barrel on lower global crude values and surplus supplies in the region.

Singapore stocks for the week ending Oct 1 jumped to a record high of 12.4 million barrels. This came after refineries in Asia maintained high intakes to take advantage of good margins. Regional demand was too low to absorb diesel barrels as high domestic stocks have kept Chinese and Vietnamese importers out of the market during the past few months.

Looking forward, a slowdown in the world economy will dampen demand for diesel in the industrial and transport sectors. China's GDP, in particular, is expected to expand by just 9.9% this year, the first single-digit growth in almost six years.

Prepared by Thai Oil Plc "

SoO, our local price hikes begs the question:
Either the govt wants to make money on the back of the economy and thereby paving the way for its own demise, OR Mangalore Refinery is taking a bunch of idiots from dodoland for a ride.
At Rs 51.20, let's remove dealer and Oil company margins, say Rs 2.30 together; next govt margin (VAT) -Rs 6.40. Next Road TAx, + some other duty. It comes down to STC Duty Free price = Rs 40.32 or about $1.35/litre = US$215/barrel.
This is not exactly what Singapore is charging, even when considering fret of about $5 /barrel. Hence, without any transparency in the Mangalore price slate, I suspect we are either overpaying or else missing something esle. Is anybody watching?

Sanjay Jagatsingh said...

This gives an idea of how smart the people in charge of Mauritius are. The other thing to note is that Sithanen imagined a three-part lie called triple external shock which has easily been disproved but is now saying that this massive storm brewing over almost all of our major economic partners will not harm us... thanks to his reform. It doesn't get more stupid!

Sanjay Jagatsingh said...

How does this title sound nine years later?