PNP squandered over 3 Billion of oil hedge money

As the debate over high oil prices continues in Jamaica, the PNP call for a roll back in the Special Consumption Tax (SCT) on petrol has now come under scrutiny.

Minister of Finance Dr. Nigel Clarke has hit back accusing the PNP and Phillip Paulwell of weaponising misinformation to mislead the public. In a series of post, Dr. Clarke said that the SCT imposed by the then Simpson Miller’s government racked up over 6 Billion dollars 3.6 of which was never spent on the oil hedge. That money went into the Consolidated Fund and was ostensibly spent on other things.

According to Dr. Clarke, the PNP executed two oil hedging contracts, of which Jamaica never benefitted from. Both hedging contracts only cover a fraction of the oil imported into the country. Over the period of the hedge, Jamaica imported 24 million barrels of oil, of which the hedge only covered about 33%. That means, the PNP lied when they told the country the SCT money was to pay for an oild hedge to cover the importation of oil. 

In effect what happened, was that the PNP imposed a tax on Jamaicans to aid in budgetary support and spent only a fraction on the Oil Hedge. The remaining 67% of oil imported while the hedge was in place was still been paid for by Jamaicans in full over the period of time. In effect, the only reason why Jamaicans weren’t faced with higher prices, then, was because oil prices on the world market was trending down.

As to the pressing problem of rolling back some of the SCT on fuel? According to Dr. Clarke, at this moment with increased Government spending across the board, the government is not in a position to roll back the SCT.

Staff Reporter

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