57% of the petrol plate is royalties and taxes

During the period between January 2020 and February 2021, oil markets witnessed a decline in prices to their lowest historical levels. In Lebanon, the consumer did not feel this decrease much because the royalties, fees and taxes imposed by the Ministry of Energy were gradually increasing until they reached their maximum in February. In January 2020 the value of fees and royalties on the diesel can amount to 1,360 pounds, which represents 7.5% of the selling price of the plate to the public, but in January 2021 it amounted to 7240 liras, or the equivalent of 36.2% of the selling price of the plate, then it rose to 8,440 liras at the end of February 2021.

Source: Ministry of Energy and Water – Design: Ramy Elyan | Click on the graph to enlarge it


The same applies to gasoline. The value of fees and royalties amounted to 10 thousand pounds, or the equivalent of 40.5% of the sale price of the plate, but after a year had passed, the value of these fees and royalties was equivalent to 56.4% of the selling price of the gasoline canister and its value was 16135 pounds, then it rose to 18,441 Syrian pounds, or the equivalent of 57.2% From the selling price of the gasoline canister.
All of this is happening despite the fact that the quantities of gasoline and diesel imported into Lebanon are supported by the Central Bank’s foreign exchange reserves. The Banque du Liban covers 90% of the invoices for importing these two items and charges the price in Lebanese pounds according to an exchange rate of 1520 pounds. The argument that the Ministry of Energy uses to grant private companies (import, distribution, transportation, sales to stations) these increases is related to the 10% that the Bank of Lebanon does not cover with its dollars according to the exchange rate of 1520 pounds, that is, it is calculated on the market price, which makes 10% of the merchandise price is calculated on the basis of the free market price.
It is noteworthy in this equation that the price of the goods at the end of February, despite all the global increases that hit it, has not yet reached the level it was in January 2020 with regard to diesel fuel, and it is still lower than it was with respect to the gasoline plate. Silence about this matter and letting the Ministry of Economy move according to its convenience with the private sector will encourage it to take subsequent steps for further increases whenever the exchange rate of the dollar against the lira rises. The Ministry of Energy is the main actor in this matter, regardless of the brutality, greed, greed, and well-known monopoly desires of the private sector. Curbing the behavior of the Ministry of Energy is necessary because it takes into account the interests of the most powerful groups, as is the custom of the powers of power in Lebanon. The interests of these groups are to obtain, as importing companies, distribution companies, transport trucks, or consumer sales stations, a greater remuneration to compensate for the emergency shrinkage of their assets and profits resulting from the rise in the price of the dollar against the lira. These groups are also not concerned with the ability of the consuming groups to cover this rise in prices. Rather, they sought to exploit the decline in international prices to obtain adequate coverage for the price increase that does not arouse popular discontent.
The behavior of these groups is known, but the problem lies in the party that promotes this behavior and reinforces it with increases in the rewards, i.e. the Ministry of Energy. This ministry believes that the increase in royalties is a fair compensation for the increase in the exchange rate, ignoring that gasoline and diesel are subsidized by the remaining dollars in Lebanon in order to maintain the minimum stability of some prices related to their consumption, and that the consumer himself did not receive compensation in his income towards the increase in The price of the dollar, and therefore any increase in the tax burden on the consumption of these materials affects the middle and poor segments of society, and has almost no effect on the higher classes. This is happening in light of a great social deterioration after more than 42% of residents in Lebanon slid below poverty lines, meaning that the majority of the middle class have become poor, while the groups that were poor have become poorer.
For the benefit of the Ministry of Energy this matter? In the interest of the import, transmission and distribution companies and the owners of the fuel stations, who accumulated wealth in the past at the expense of the consumer? Does the Energy Department want to help them accumulate more? Or does it seek to prepare the consumer for free prices in the market?

Subscribe to «News» on YouTube Here

Continued «Capital» on Instagram

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.