MPs, gov’t bickering over fuel pricing

AMMAN – The Lower House Energy Committee on Monday requested the government to come up with a new pricing mechanism for fuel products, accusing it of overcharging consumers for oil derivatives. 

The government responded later in the day by brushing off the accusation and outlining the pricing mechanism.

Head of the committee, MP Raed Khalaileh, told The Jordan Times that the government adds around $43 to the cost of each imported oil barrel before it starts calculating the final price for end users. 

Khalaileh and his panel’s members had met earlier in the day with secretaries general of the ministries of finance, industry and energy, which are in charge of preparing a monthly update of fuel prices.

He said the government imposes $109 on a tonne of imported oil, or around $20 a barrel, and then adds general and special taxes on a barrel. 

The overall extra charges imposed on each barrel are around $43, he said. 

For example, he explained, if the price of oil globally is $40 a barrel, the government would add $43 and make it $83 a barrel before starting its pricing mechanism that include other charges such as costs of maritime shipment, insurance and fuel waste, among other costs.

He quoted the officials attending the hearing as telling the panel that the extra charges go to boost the strategic storage of oil. 

He said that the committee requested the government to prepare another pricing methodology within a month, adding the new mechanism should be transparent and fair to consumers.

In a statement to the Jordan News Agency, Petra, Minister of Energy and Mineral Resources Ibrahim Saif stressed that there are no “unannounced” charges, insisting that the pricing mechanism is transparent and has proven flexible, as shown by the frequent drops in the local prices of fuels after the mechanism was put in place.  

The government says oil derivatives in the domestic market are subject to additional costs set by international markets for the product to reach Aqaba, Jordan’s sole sea port.

These include maritime transportation costs from Singapore on the Mediterranean route, passing through Yanbu Port in Saudi Arabia before reaching Aqaba Port. 

Added to that are the costs of maritime insurance, fuel waste during transportation and the fees paid for letters of credit issued by banks to secure the cargo.
Additional costs in Aqaba include fees collected by Aqaba Ports Corporation, delay fines, and storage and handling costs paid to the Jordan Petroleum Refinery Company (JPRC).

Other costs are related to land transportation from JPRC to fuel stations, distribution, fuel station profits, and changes in the value of stored fuel.