After many months of speculation, the moment many had feared based on international trends and several hints from the Government came to pass last Friday.
Finance Minister Colm Imbert rose to his feet last Friday in the Parliament to announce the price of gas would be rising after Easter weekend, with premium and super gasoline rising by $1 each to $6.75 and $5.97, with diesel shifting up by 50 cents from $3.41 to $3.91. Kerosene will also be raised from $1.50 to $3.50.
There had been concerns that the subsidy would be adjusted as the ongoing tension between Russia and Ukraine continue to push up energy prices worldwide. When that tension escalated to a full-scale invasion in late February, many countries across the world saw their prices at the pump increase.
In March, Prime Minister Dr Keith Rowley warned that T&T may have to do the same.
He said: “The Government through the Ministry of Finance will have to take a decision as how much funding we can find to subsidise, to take some pressure off the population cannot be insulated completely from oil running at US$120, US$130, US$145 per barrel.”
He explained that since 2002, there had been a shortfall in the subsidy fund.
“In 2001, that was the last year where the subsidy fund matched the subsidy paid out where there was no shortfall,” he said, explaining then the subsidy was maintained at a varying expense to the government.
This was further explained by Finance Minister Colm Imbert in a series of tweets on Tuesday.
Imbert said: “Gasoline is purchased by countries at an ex-refinery price, based on the cost of acquiring and processing oil. It costs us in T&T $7B a year to purchase fuel, which is sold to motorists for $5B. The $2B difference is paid by taxpayers, which could be used for many other purposes.”
He explained that the money absorbed could be utilised for other expenses of the government.
“The $2 billion fuel subsidy is not income. It is an unbudgeted additional expense. If we have to spend an additional unbudgeted $2 billion in 2022 on this, the real question is: what existing areas of expenditure would the Government have to reduce to make up that additional $2B expense?” he asked on Twitter.
Rowley’s comments in March however set off a slew of people searching for a way to save on gas, by switching to CNG.
Rishi Ramroopsingh of ANSA Motors’ Burmac CNG team confirmed that interest in conversions shot up in March.
“Let me tell you, since the comments were made by the PM we’ve seen almost like a 75 per cent increase in interest in CNG. So Burmac CNG, which is, ANSA Motors is the company that I work for. There’s a division called the Burmac CNG which deals specifically with our aftermarket installations. So you’re talking about your normal combustion engine being converted to CNG. And we’ve actually seen about a 75 per cent increase in the interest,” said Ramroopsingh.
“So social media pages, phone calls, emails, WhatsApp, a general increase in the amount of inquiries as to how to do the conversion, and what it entails and the cost and just the whole 180 degrees about CNG.”
Over at Dumore Enterprises Ltd, the demand for CNG conversions also increased following the Prime Minister’s announcement and subsequent T&T Guardian article highlighting the subsidy costs.
Rajeev Ramessar of Dumore confirmed conversion requests became frequent.
“So prior to the announcement, we may have done probably like one or two conversions a week. Now every single day, we have a conversion, or we have bookings for the upcoming week,” he said, “I would say that we may have been between 10 and 20 per cent, occupied, or 10 or 20 per cent booked up, but after the announcement is when you would have seen that the entire week now is booked for conversions. So what would have been 15 or 20 per cent is something like 80 per cent.”
Ramessar also played down criticisms that CNG is an outdated fuel, as he pointed out it was the perfect fuel to push the transition to cleaner energy consumption for most given its price point compared to new electric and hybrid vehicles.
“It will be very the most suitable transition fuel. Because either way, you were to look at it, you have vehicles on the road that are over 10 years old, which is a typical vehicle that somebody would own right? Those vehicles are prime candidates for conversions. Our conversion is to $13,000. A new electric vehicle, I think, the one that Massy launch recently might have been $360,000 and the other alternative in a foreign used in the Nissan Leaf. And I think that upwards $200,000,” he said, stating that for the average man would find it easier to pay $13,000 right now as opposed to buying electric currently.
The NGC CNG company also confirmed there had been an increase in CNG consumption this year with March sales being the highest in the company’s history.
The company told the Business Guardian, “The demand for CNG continues its upward trend with March 2022 recording the highest single months sales ever, of 1.7 million litres, an increase of 17 per cent over the preceding month (February 2022). With the continued reopening of the country, following the COVID-19 restrictions, NGC CNG expects even higher sales in the months to come.”
Similarly, there had been a surge in demand for the Honda City, which is sold with CNG kits already installed.
This was particularly notable as sales appeared to be on the increase, despite the price of City increasing last year after the removal of tax concessions on motor vehicles in 2021 which saw the price of the City increase by $20,000.
“The Honda City has been for the past couple of years one of the hot sellers at ANSA Motors just because of where the price point was at. Given the vat exemption that would have existed prior to the last budget. Now I know when they read the last budget they said the VAT would be reintroduced and the price of the car went up. It didn’t change the fact that the interest in the car was still there. And it continued to remain one of the top-selling models that we have in this class,” said Ramroopsingh.
He confirmed to the Business Guardian that about 50 new Honda City vehicles were being sold monthly in 2020 but following the price increase, there was a slight dip in sales to 42 new units being sold a month in 2021.
However, the 2022 numbers are already well ahead of both years.
“At the end of Q1 this year, we average we averaged about 60 units,” said Ramroopsingh.
He said however, the draw continued to be the reduced price at the gas pump.
“When they removed the concession, the customers would have still expressed interest in the car because of the economics of it. So for CNG it’s a $14 fill and you get your 150 kilometres on the fill, as opposed to on petrol and that’s what does what is causing this type of movement to the unit,” said Ramroopsingh who noted that the car was especially favoured by middle-income families.
Other car dealerships have also ramped the advertising of their hybrid and electric options, with Massy Motors hosting an event promoting its Hyundai Kona and Ioniq electric vehicle models on April 9, one day after the Finance Minister’s announcement concerning the pending gas price increase.
ANSA Motors also announced the arrival of the Hybrid Honda HRV this week, as customers continuously asked for the vehicle which had only been available through the foreign-used market.
“We actually had no other choice with the hybrid. The grey market may have brought the product, the same model before we did as the dealership. And we had a lot of inquiries coming from customers as to when we’re going to bring it what’s going to happen,” said Ramroopsingh.
The arrival of the vehicle at the ANSA showroom also comes after another announcement by the Finance Minister that exemptions would be returning in May.
Imbert said, “Supply chain disruptions caused by the COVID-19 pandemic have intensified with the war in Ukraine, adversely affecting the supply of fully electric cars. As a result, to encourage reduced fuel consumption, small hybrid cars will be exempted from all taxes in T&T from mid-May 2022.”
