Lecturer on total subsidy removal: Prepare for backlash, protest, unrest

Government should expect a “backlash” including of “protest” and “unrest” if it goes through with the expected complete removal of the fuel subsidy, said a lecturer at the Arthur Lok Jack Graduate School of Business. In an e-mail reply to a Business Guardian query, Balraj Kistow, lecturer and programme director at the Arthur Lok Jack Graduate School of Business (Lok Jack GSB), warned of “an expected backlash in the form of protest and unrest courtesy of the labour movement.”

He said, “Much of the fuel subsidy goes toward diesel fuel and is generally aimed at keeping the transportation cost for goods and services and people fairly low. If the subsidy were to be removed, based on a price of US$80 per barrel for oil, we can see the price of both super and diesel fuel going to approximately $4 to $4.25 per litre. This can have a dramatic impact on inflation, disposable income, consumer confidence and standard of living.”

He was speaking at a post-budget discussion at the Learning Resource Centre, University of the West Indies, St Augustine, on Thursday. Kistow said he is “sure that the Government would be mindful of this,” adding this must be the rationale behind the announced “move toward the use of compressed natural gas (CNG).”

He said, “Converting buses, maxi taxis, goods vehicles and taxis to CNG would significantly reduce the amount of diesel consumed and the resulting need for subsidy,” but, he said, “the infrastructure to support this move, such as refuelling stations, must be put in place (first) before this can be done.”

He said the CNG-conversion thrust is not new and “has been in the making for a couple of years, as the intention was mentioned in the previous year’s budget.” However, he said, “Like with so many other announced projects, we are not clear of the status.”

Kistow said it is unclear “how the Government intends to deal with the subsidy regarding the inter-island ferry and the water taxi.” He said in the 2011 budget presentation, former finance minister Winston Dookeran had announced the Government would be looking to convert the ferries to use CNG, but the practicality and what has come of this plan remain unclear.

The Lok Jack GSB lecturer said “the issues are slightly different” for super gasoline. Kistow said the removal of this subsidy will affect most persons with private vehicles. “While many persons may prefer to leave their vehicles at home rather than drive to work, the state of the public transport infrastructure is grossly inadequate and inefficient.”

“Who knows which morning or evening bus drivers would decide to strike,” he said. “Catching a maxi taxi on some routes at peak hours can be a hazardous exercise, given the pushing and shoving to get in.”

Kistow recommended, “To ease the effect of removal of this subsidy, the Government would want to consider some different ideas, such as having a dedicated bus lane on the east-west and north-south corridors, some level of park-and-ride, inner city street cars, or the less popular monorail system.”