Antigua and Barbuda could lose as much as EC$100 million within months if the

government

continues subsidising gasoline and diesel at current levels, Prime Minister Gaston Browne has warned.

Browne made the disclosure Saturday on the Browne and Browne Show on Pointe FM as he explained the government’s decision to increase fuel prices at the pump.

The prime minister said the subsidy had already cost the government nearly EC$40 million through forgone tax revenue and money owed to the West Indies Oil Company.

According to Browne, the government would ordinarily collect between EC$3 million and EC$4 million monthly in taxes from petroleum products.

He estimated that the Treasury had forgone about EC$24 million over the past six months while accumulating a debt of at least EC$15 million to the West Indies Oil Company.

“So you’re talking about a loss there of nearly $40 million,” Browne said. “We cannot continue to sustain that.”

He said the arrangement effectively became a “negative tax” because the government was paying the fuel supplier instead of collecting revenue from petroleum sales.

Browne warned that the financial burden could grow substantially if international oil prices continue increasing.

“If we continue to subsidise at that rate, within a few months we could find ourselves losing as much as $100 million,” he said.

The Ministry of Finance recommended increasing gasoline and diesel prices by EC$3.50 per gallon, according to Browne.

However, the prime minister said he rejected that recommendation because such a large increase would place too much pressure on consumers at once.

“I’ve said to them that that is too large an increase in one fell swoop,” Browne said.

He instead asked officials to consider an increase of approximately EC$2 per gallon.

Browne said the proposed adjustment would take diesel to about EC$16.50 per gallon and gasoline to approximately EC$16.25. He noted that both prices would remain below the regional average of more than EC$18 per gallon.

The prime minister said the government had tried to shield consumers for as long as possible, but continuing the subsidy had moved beyond the country’s financial capacity.

This article was originally published by Antigua News Room. Read the original article here: VIDEO: Fuel Subsidy Losses Could Reach EC$100 Million, Browne Warns.