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Raffique Shah


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Reduce gas subsidy, boost food production

By Raffique Shah
February 10, 2008

Recently, Trade and Industry Minister Dr Keith Rowley hinted that the Government may soon need to reconsider its $2 billion a year fuel subsidy. Reaction among the population ranged from grumbling to expressions of outrage, so much so that another minister denied any such move was being considered. I beg to differ. The Government must not only cut back on certain subsidies it doles out, but it must determine where cuts are justified and where it needs to enhance state assistance.

Before erupting into anger over cut backs in hand-outs, people must ask themselves who benefits from what, and who will stand to lose if some subsidies are reviewed. Let's start with motor vehicles. In this country, where trying to get accurate statistics is akin to pulling teeth, one assumes there are between 350,000 and 400,000 vehicles on the nation's roads. One might also assume that 20 per cent of these are commercial or hired vehicles, with the remainder being privately owned.

With 400,000 vehicles, the average annual subsidy amounts to $5,000, while at 350,000 it is approximately $5,700.

If the Government were to start by cutting 25 per cent off subsidised fuels, the average additional payment per year per vehicle would be $1,400. That cannot, by any stretch of the imagination, be described as outrageous. If vehicle owners cannot spend just over $100 per month more for the privilege of driving on the nation's limited road network, then maybe they do not qualify for owning vehicles!

More than that, truckers, who tend to complain the most, and who swear that the prices of goods and services would rise substantially with any increase in fuel price, cannot justify their claims. Not when their increases in diesel cost would be no more than $100 per truck per year!

Now, what should that saving of $250 million be used for? I would venture to answer in one word: food! Food is far more vital to the survival of everyone, truckers included, than fuel. Realistically, the world is facing rising food prices and shortages of certain basics. Would it not be wiser to channel what is wasted on vehicles on securing adequate, reliable supplies of food, so that not even the poorest in the nation starve?

The fuel subsidy can be further reduced, say, two years later, by another 25 per cent. I shall not argue for a complete removal since I think as an oil-producing country, our citizens must reap some benefits from the largesse this resource brings to us. But we can neither afford, nor should we allow, fuels to take precedence over food.

Large oil-producing countries like Venezuela (where gasoline retails at TT$1 per gallon), Iran ($2) and Libya ($2) can have their cake and eat it, in a manner of speaking. They rake in tens of billions of dollars annually from oil, their production levels being well over two million barrels a day. Ours stands at a paltry 140,000 barrels, much of which is exported while we import crude at world market prices to process at the refinery.

If we pour an additional $500 million a year into food production, with proper planning and execution, we can make available a wider variety of local foods and fruits, and at costs that make them affordable to even the poorest in the society. Should we not think of feeding our people as the number one priority? Of course, cutting back on fuel subsidies is not a solution to either the food crisis or the traffic horrors motorists are subjected to.

Before subsidies are cut, public transport must be enhanced. The Government is still dreaming of a rapid rail system. Works Minister Colm Imbert, who had all but assured us that the trains would be up-and-running in a year or two, now says the designs will cost US$67 million, and take 18 months to be completed. By the time the real price-tag and time-line hits him, he would abandon rail and probably burrow himself beneath the putrid waters of the Gulf to escape angry Trinis!

There are such simple, much less costly alternatives to rapid rail, that it defies logic why the Government would want to go down that track. Many experts have pointed to the Bus Rapid Transit system, which would require infinitely less capital and recurrent expenditure, and which could be ready, in stages, starting within one year. Two "busways" running parallel to both lanes of the Butler/Hochoy highways, and restoring the PBR to a bus-only freeway in addition to freeing it from traffic lights (by over- or underpasses), would work wonders.

There are other subsidies that also need to go: why is URP still necessary in an era of full employment? Its very name is an anachronism in a period of full employment. Channel that billion-dollar-plus "subsidy" enjoyed by the young and lazy towards easing the everyday burdens of senior citizens instead. The ceiling for old age pension should be raised to $60,000 a year and the quantum itself raised generously. Disability and other social benefits should be what we subsidise. Not people with "gas brains" and those who are too damn lazy to work for a living.