Fuel price increase rattles Jordanians

Jordan spends about 10% of its GDP on energy imports. In some years that rate reached 18%.
Wednesday 09/10/2019
Since July, the Jordanian government has applied a lump-sum tax of $0.50 on a litre of 90-octane gasoline.
Since July, the Jordanian government has applied a lump-sum tax of $0.50 on a litre of 90-octane gasoline.

LONDON - Jordanian officials ordered a fuel price increase, effective October 1, that shocked the country, especially poor and low-income classes who face weak purchasing power because of government economic pressures.

The pricing committee for oil and its derivatives at the Jordanian Ministry of Energy and Mineral Resource adjusted retail prices of oil derivatives by up to 2.5%. A ministry statement indicated the price of the most popular 90-octane gasoline would go up 1.9% to 770 fils ($1.08) per litre, taxes included.

The price of 95-octane gasoline was scheduled to go up 2% to 1 dinar ($1.42) a litre in November, while the prices of kerosene and diesel are to increase 2.5%, to 590 fils ($0.83) per litre.

The ministry attributed the increases to higher prices of crude oil and oil derivatives in global markets during September when the price of Brent crude rose to $62.90 a barrel.

Since July, the Jordanian government has applied a lump-sum tax of $0.50 on a litre of 90-octane gasoline and about $0.80 per litre on 95-octane gasoline. It applied a flat tax of $0.23 per litre of diesel and kerosene, changing the taxation system from a variable rate based on world market crude prices.

Energy is one of the biggest concerns of the Jordanian government because of its high import cost and its effect on the trade deficit and commodity prices. Jordan spends about 10% of its GDP on energy imports. In some years that rate reached 18%.

As winter approaches, some Jordanian families are likely to face extra heating costs that challenge their budgets. A large proportion of households rely on liquid fuel and domestic gas for heating.

Jordan has been experiencing a move towards solar energy to escape exorbitant electricity bills after the liberalisation of electricity and oil derivative prices. The government has set up incentives for individuals and businesses to shift to renewable energies to reduce the haemorrhage of foreign currency caused by oil imports.

Jordanian Finance Minister Ezzedine Kanakria denied that the government was considering raising taxes to offset falling revenues. He said the measures are focused on promoting growth, combating tax evasion and rationalising public expenditures.

The minister stressed the importance of controlling expenditures, saying “it is unreasonable to keep financing some of the expenses from borrowing because borrowing should be limited to financing projects.”

(With news agencies)