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Government announces fuel pricing mechanisms

By Mohammad Ghazal - Jul 04,2018 - Last updated at Jul 04,2018

AMMAN — The government announced on Tuesday its mechanisms of pricing fuel derivatives and indicated that it generated JD854 million in 2017, representing 13 per cent of last year's local revenues, from taxes and fees imposed on fuel derivatives.

The government generated JD350 million from taxes and fees on fuel derivatives during the first four months of 2018, but revenues are not expected to continue an up trend, as there is more reliance on hybrid and electric cars in Jordan, Minister of Finance Ezzeddine Kanakrieh said during a joint press conference with Minister of Energy and Mineral Resources Hala Zawati.

"A large percentage of revenues from taxes and fees on fuel derivatives come from those taxes on unleaded gasoline 90 octane and unleaded gasoline 95 octane.” 

“But as the government is supporting environment-friendly and energy-saving vehicles such as hybrid and electric cars, the revenues will drop in future,” Kanakrieh said.

The minister added that all revenues generated from the taxes and fees are directed to the Treasury, while the government still subsidises home-cooking gas cylinders by JD45 million annually.

The minister said public debt has reached “alarming” levels. Jordan’s public debt was JD27.7 billion at the end of April, representing 96 per cent of the Kingdom’s gross domestic product.

Zawati said that to ensure justice, the tax imposed on 95-octane, unleaded gasoline was higher than that imposed on 90 octane unleaded gasoline, heavy fuel and kerosene, adding that consumers of the 95 octane unleaded gasoline are of higher income.

Pricing of fuel derivatives takes into account the global average prices and costs, including the cost of transportation, storage, evaporated fuel and other costs. Then, special taxes, sales tax and fees (which go to support the state budget and strategic reserves) are added to the price, she said.

The price of 90 octane unleaded gasoline in May was JD0.815 per litre. Of that, JD0.371 is the price of a litre arriving in Aqaba, and JD0.058 is added per litre as cost of storage and distribution, with JD0.386 added per litre in the form of taxes and other types of fees, she said.
The price of 95 octane unleaded gasoline in May was JD1.050 per litre. JD0.390 is the price of a litre arriving in Aqaba, and JD0.059 is added per litre as cost of storage and distribution, with JD0.601 added per litre in the form of taxes and other types of fees.

The taxes and fees imposed on a litre of 95 octane unleaded gasoline represent approximately 57.2 per cent of the overall price of a litre, while taxes and fees on a litre of 90 octane unleaded gasoline represent 47.4 per cent of the total price of a litre.

The price of diesel in May was JD0.615 per litre JD0.395 is the price of a litre arriving in Aqaba, and JD0.059 is added per litre as cost of storage and distribution, while JD0.161 is added in the form of taxes and other types of fees.

The price of Kerosene at the beginning of May was JD0.615 per litre, of which JD0.396 is the price of litre arriving in Aqaba, JD0.059 is added per litre as cost of storage and distribution and JD0.161 is added to the price of each litre in the form of taxes and other types of fees.

Taxes and fees imposed on a litre of diesel represent 26.2 per cent of its overall price, while taxes and fees imposed on a litre of kerosene represent 26 per cent of its total price.

“There are differences in the percentages of taxes and fees imposed on various types of fuel derivatives that take into account their usage to ensure solidarity and justice,” Zawati said. “The highest tax is on unleaded gasoline 95 octane.”

The cost of home-cooking gas cylinder is JD8.22, but it is sold at JD7 after government subsidies. 

The way the monthly prices of fuels are calculated has been a “mystery” as far as many opposition figures, ordinary people and experts, triggering a public call for transparency. 

Stressing the government’s commitment to transparency, Zawati said all revenues generated from taxes on fuel are used to finance items in the state budget, including current expenditure and projects.

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