Minister defends oil derivatives pricing mechanism

Deputies call for alternatives to fixed tax on oil products

oil fuel
Forty percent of Jordan’s oil derivative demand is refined locally, according to the energy minister. (Photo: Freepik)
AMMAN — The government does not import any oil derivatives directly, Minister of Energy and Mineral Resources Saleh Al-Kharabsheh said Monday, explaining that oil products are imported to Jordan via the private sector, according to local media outlets. اضافة اعلان

Kharabsheh said that the government is unable to import large quantities of oil when its prices drop, as demanded by some lawmakers.

Speaking at a meeting of the Lower House Energy and Mineral Resources Committee, Kharabsheh said that the government imports around 10,000 barrels of oil daily from Iraq, at a $16 discount compared to the global oil price.

“The difference in the import price from Iraq comes from the expenses for inspection, quality teams, and additional transportation costs, bringing the difference (saving) from the global price to about $20 million per year,” he said.

The minister clarified that 60 percent of Jordan’s needed of oil products are imported as refined derivatives, and around 40 percent are refined at Jordan Petroleum Refinery Company, which has a refining capacity of 50,000 barrels per day.

Kharabsheh stressed that the pricing mechanism for oil derivatives is clearly stipulated in the regulation issued in 2019, which defines it within clear criteria.

He indicated that there was no increase in kerosene and diesel retail prices from November 2021 until April 2022, when diesel was sold at less than its cost price.

Kharabsheh indicated that the fixed tax is as follows: 370 fils per liter of octane 90 gasoline, 570.5 fils per liter of octane 95 gasoline, and 160.5 fils per liter of kerosene and diesel. Taxes from fuel go to the state’s general budget and the amount is spent on education, health, and the National Aid Fund, according to the minister.

He stated that the cost of refining has more than quadrupled since 2012, indicating that raising the prices of oil derivatives does not compensate for any part of the budget deficit.

Meanwhile, the head of the Lower House Energy and Mineral Resources Committee, Firas Al-Ajarmeh, said that fixed taxes on oil derivatives have burdened citizens. He called for coming up with a clear and transparent mechanism for pricing oil derivatives, and looking for alternatives to the fixed tax imposed on fuel, adding that “international oil prices have decreased, and therefore they must be reduced locally”.

Several deputies asked that alternatives be found to the fixed tax for each petroleum derivative, which has exhausted citizens, adding that fuel hikes have been reflected in the cost of food and other essential.

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