The Competent Authority has approved the new petroleum prices for June-July 2011 to be effective from Thursday 16th June 2011 and therefore wish to notify the public accordingly.
2. Retail price for all products have decreased significantly compared to the price for May- June 2011. The retail price for June-July 2011 for Diesel is decreased by 18.80 seniti to $2.94 per litre(equivalent to 6.0% reduction), followed by Kerosene by 18.16 seniti down to $2.32 per litre (equivalent to 7.3% reduction), and Petrol have decreased by 11.52 seniti to $2.90 per litre (equivalent to 3.8% reduction).
3. Petroleum prices for June-July 2011 are mainly determined by the movement of FOB prices in the Singapore market based on May 2011 average prices of the daily published Means of Platt’s Singapore (MOPS) benchmark prices. The significant decrease in June-July 2011 price is attributed to the following reasons:
· Crude prices fell sharply in early May 2011 dropping by around US$10/bbl a day. Prices were between US$110-US$115/bbl for the crude Brent during May 2011;
· The month average crude prices for May 2011 were also down by around US$7- US$8/bbl in comparison to MOPS (Singapore Prices) for April 2011. Petrol was down by around US$6/bbl whereas jet fuel fell by around US$11/bbl, and diesel by US$11.50/bbl;
· Freight cost for transporting fuel from Singapore to Fiji remains steady during the month of May 2011;
· The weakening of the US dollar has also helped the drop in local currency prices. For the month average, the Tonga Pa`anga strengthened by more than 1% against the US dollar during the month of May 2011;
4. Depending on the prices for June 2011, which started to increase, and this trend continues to increase towards mid June 2011, than it is predicted that prices for July-August 2011 will increase and Tonga can expect a reverted increase in petroleum prices for the next review for July-August 2011 prices.
5. The Competent Authority in the interest of the public and the petroleum industry continue to engage a process of review that features transparency and accountability in setting of price and profit caps, an incentive mechanism for investments, improve effectiveness of petroleum distribution to remote and rural areas. The Authority regulatory framework also features a validation process where price controls are a significant component, and the primary mechanism through which incentives are provided to achieve these objectives.
Ministry of Labour, Commerce and Industries
15 June 2011.