Thursday, January 8, 2009

Oil Prices Should Come Down Immediately by 25%

From its current level of Rs 34.10 a litre. That would bring it to about Rs 25 a litre which would be closer to real prices. The recent modification of the APM formula from 20% quarterly variations to 7.5% monthly variations is the latest of a series of intellectually dishonest arrows that Sithanen has been retrieving from his bean-counting quiver. It is a device to prevent Mauritian voters from immediately benefiting from the collapse in oil prices so that his ability to fleece us with a 15% VAT remains unchecked. 

That's kind of stupid because energy is an important building block of our competitiveness. In fact, he should have capped the amount of money government makes when oil prices went through the roof between July 2005 to July 2008 and rapidly reduce pump prices when oil prices collapsed thereafter. Of course that's way too much to ask from a bean-counter. He preferred instead to viciously tax us to death when oil prices skyrocketed and come up with a little contraption to keep them artificially high when the latter crashed.


Jean Bernard said...

Dear Sir

Based on the latest comment of the minister ( Gowressoo), the consumer will have to pay for wrong administration of STC Hedging commitee. As usual in Mauritius , in case of profit the Government is happy. In case of lost, the taxpayers or everybody paid.
I was in Mauritius in December 2008 before the fall of price of oil.
The Taxi driver ask for Rs500 from airport to New Grove for my luggage.
Travelling from New Grove to the Airport on the 08 January 2010, we ask for the same price.
I informed him the best I can do was Rs 300. He disagree and I manager to get another Taxi driver for Rs 300.

So how do the common people get the change of oil price reflect on everyday life?

sanjivP said...

This saga of high fuel prices in Dodoland takes me back to about 2 years ago when the then Minister of Commerce, the most honorable Dr. Rajesh Jeetah triumphantly announced that through his heroic discussions with Mangalore Refineries Limited, Mauritius was then going to save Rs. 400m.
A few points to ponder:
a. Most likely the learned minister was hinting at some kind of hedging that the STC did on its future fuel imports from this supplier. That was of course well thought of, a good strategy, seemingly.
b. So somebody lost Rs 400m! Sincec he is a trader, he had to secure his position. But from mid 2004 till July 2008, Oil prices have known positive slope, i.e. increases. Hence, he waited, waited and then finally lured our grassroots analysts from STC to but yet another Forward contract, say for a few deliveries over a 6 months period, as reported by local press. Now came his time for squaring and 'cubing' his position. and he did it with significant gains at the behest of not STC but of the country.
No my friends, the price of petrol will probably never go back to world market prices in Dodoland; hence, the cautious 20%/3 rate applied every month is based not on the premise of monthly oil prices average but on limiting STC losses before the next hike when the STC will then square its position.

Guess what, there will still be bonus and new cars for the STC directors this year.

Drive carefully.

akagugo said...

@ sanjivP:
"a clear case of a satisfied customer coming back for more", as Mangalore delightfully puts it...
Coming back for more by virtue of a bric-à-brac contract (no insurance, inexperienced shipowner, reactive fuel yielding sediments that keep on increasing or one grade contaminating another during transit, etc, etc).
Wai do!

Akash GG said...

It seems that we will continue paying unreal prices at the pump, thanks to a very slow decrease in crude oil prices. Those who tweaked the APM's minimum triggers must be rejoicing: the STC will reimburse its hedging fiasco faster and keep making unreal net incomes at our expense for quite a long time. Bravo!

Sanjay Jagatsingh said...

At the expense of our competitiveness...

akagugo said...

Cheap oil is having unheard-of impacts on shipping routes. May I presume someone had bet on this before screaming for the creation of a local shipping-cum-bunkering hub...?

Sanjay Jagatsingh said...

They've been making all kinds of bets and predictions. It would be interesting to check the informational content of these forecasts.