Gains from oil revenues for development

Ali Al Matani  –
ali.matani2@gmail.com –

Much controversy happens by the end of every month about fuel prices as well as pricing mechanisms. Positive and negative reactions increase according to the increase in the monthly prices that corresponds with the prices of fuel in the international market, which we hope would not only reach $50 but exceed a $100. Some people have another point of view that the increase in oil prices is similar to the increase in prices of food and beverages and essential commodities. Then, how would we harmonise the incompatible aspects?
All aspects of fuel pricing and prices should be made clear to the local communities. They are related to standards we should abide by in line with the fuel derivatives pricing policies as well as subsidy structure for categories that deserve it.
The variables are the subsidy mechanisms, classes of receivables and application systems.
Firstly, we have to believe that deregulation of fuel derivatives prices is an international policy applied all over the world; we are no exception.
Secondly, we should believe what the government gains from oil and fuel derivatives revenues are for the development of its people and various sectors. Thirdly, we should adapt to changes in consumer variables and try to rationalise it as much as possible.
Time and conditions demand that we change our daily behaviour and adapt to the changes that may devour many of the things we’re indulging in.
We should not deceive ourselves saying that we would live in the same way forever and that the government would always be open-handed and giving.
According to the oil and gas sources, we saved RO 250 million by deregulating fuel derivatives over the last period. That is an achievement by the government and citizens, which benefited the State’s treasury and which, in turn, will support development projects, and benefit our country and citizens.
There are some constants we have to agree on. One of which is there is no way back on liberating fuel derivatives prices as a policy to be applied and executed without arguing.
Moreover, we must agree on subsidising some categories such as social security categories and low-income groups whose salaries do not exceed RO 600. We should agree on this as a policy, and these classes need subsidy to buy fuel.
The question that arises is what are the mechanisms followed to provide subsidy for those in need of it and how would we avoid transgressions that may occur in applying subsidy mechanisms?
There will be mistakes as well as other known transgressions. On the contrary, we have to be convinced that this is much better than not having any subsidy for some classes, and not liberating oil prices and thus subsidising affordable classes. Today, these classes are equalised with low-income people. There are people who deserve subsidy.
Determining classes of receivables require much data, some of which are: monthly salary (either the basic or income after adding bonuses and incentives) in order to identify those who deserve subsidy. It requires using the ID number that’s connected to the number of cars the citizen owns in addition to the prefixed subsidy rate and linking of oil stations to deny subsidy to the wrong people.
The process is not easy. Submitting the registration request for subsidy for fuel derivatives in addition to submitting evidence that the salary does not exceed RO 600 can determine the eligible classes.
Hopefully, we will be more convinced that the state system in executing ascetic policies is not because the state wanted so, but it was obliged to do so as a result of many issues: the economic crisis which affected all countries, keeping the financial status of the state and ratings from international organisations in case ascetic policies are not executed, as well as formulating effective tax policies that would have an impact on providing financial facilities.
Moreover, one of the issues is the obligations to regional states, as the value-added tax that will be applied in the coming years. So, we should not nag over every step towards this direction.
On the other hand, the government should prepare people for these changes and developments. Citizens are well aware of what’s going on around them, so they should be an integral part of the system with all its interactions.

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