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| PM: Fuel Surcharge May Return; Electricity Dept. to be Privatized |
| By Sheena Brooks |
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Hon. Dr. Denzil Douglas |
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Consumers on St. Kitts can soon expect to see an increase in their monthly electricity bills, possibly in the form of a fuel surcharge.
Speaking exclusively with The Observer Prime Minister Hon. Dr. Denzil Douglas revealed that the electricity tariff would be adjusted as part of ongoing efforts by his administration to improve fiscal efficiency. He informed that the current formula for calculating electricity rates was quite old and needed to be adjusted.
“The base rate will have to be re-examined, and we are going to have to look at the base rate in realistic terms. The rate has been set from what was the cost of diesel since 2001; it was $3 per gallon, today it’s $11. That is why I say we have to look at the rate and at what could be a VAT or surcharge based on the recalibration of the base rate,” he said.
The fuel surcharge residential consumers had been paying since January 2006 was removed in December 2009 ahead of the January 2010 general elections. As at 2009, the surcharge was being levied at EC $0.18 for every unit of electricity used, and the Electricity Department collected, on average, $6 to $8 million each month.
The Observer questioned the PM about a timeline for the rate adjustment and was told, “We hope the adjustment can be done before VAT comes in.” He added that the modification to the base tariff for electricity is expected to yield EC$14 million.
The Value Added Tax is scheduled to be implemented November 1st at a rate of 17%. As it relates to electricity consumption for residential users, VAT will be applied after the first 150 units.
Dr. Douglas informed The Observer that his administration was working arduously to have the Electricity Department privatized ahead of the VAT implementation. The corporatization of the state-owned utility company, he added, was critical to the government’s plans for stabilization of the economy.
“The Ministry of Energy and Utilities is now working quite feverishly to bring that policy directive into swift conclusion so that we would be able to divest ourselves of that service. It would be ideal, because we wanted both to coincide at the same time, but I would have to get more information on where we are with the corporatization before I can give a definitive answer as to the timeline,” he said. |
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