Energy saving drive to be launched soon |18 April 2012

 The Minister for Environment and Energy, Dr Rolph Payet, said this in the National Assembly yesterday.

Dr Payet also announced that the government has not taken any decision to either increase or adjust electricity and water tariffs because it is still studying and monitoring closely all aspects that needs to be considered before taking such a decision. 

Dr Payet was answering a private notice question by the leader of the opposition in the Assembly, David Pierre. Mr Pierre wanted to know what the ministry plans to do to ensure the impacts of fuel price increases relating to essential utilities like electricity and water on the population are reduced and if the country is anticipating any future price increases in utilities and other services like public transport as a result of fuel price hikes on the world market.

Dr Payet explained that one of the principles of the 2008 economic reforms was to reduce subsidies and communicate the true prices of commodities on the world market to the population.

But he stressed that the government remains committed to ensure that all our national objectives and efforts are not affected.

He called on the people to observe and analyse what is happening in other countries as a result of political and economic instability.

Dr Payet said that consulting the internet one will see that the price of crude oil which increased up to US $125 a barrel in May 2011, has gone up and down to reach closer to US $100 a barrel in October last year and has since then continued to rise until close to US $130 at the beginning of March 2012. And recently there has been a slight drop to near US $120 per barrel.

Dr Payet noted that the situation is still unstable and we do not expect the price to stabilise.

The question which is always being asked is why when the price goes up on the world market the same applies locally but when it goes down, locally it remains unchanged.
 
Dr Payet explained that unfortunately the answer is more complicated than it seems because there are other factors which influence the prices of fuel Seychelles imports. These include, among others, the increasing rate of the dollar in which all transactions are made, Seychelles being very isolated and therefore the country has to ensure it has a buffer stock of fuel and cannot buy on a day to day basis.

Dr Payet further stressed that exchange rate is controlled by the country’s expenses and revenues in foreign exchange.

“If we reduce our expenses in foreign exchange to buy only the essential and increase our revenues through more exports, the exchange rate will go down and this will remove pressure on the cost of fuel and inflation,” said Dr Payet.

Dr Payet added that it is the consumers who influence the foreign exchange balance.
He said energy security is paramount for a small isolated country like Seychelles but this unfortunately comes at a high price.

He noted that among the measures the government is taking to reduce the impact in fuel cost is investments in more fuel storage facilities.

He added that Sepec (Seychelles Petroleum Company) has increased its storage capacity on Mahe by 30% at a cost of R23 million, on Praslin by 200% at a cost of R78 million.

In order to manage national demand for fuel, Sepec has to buy fuel in advance, stock and later sell according to demand. He stressed that during this period prices can either increase or go down and Sepec needs to have money to manage these fluctuations in prices.

The fact that fuel prices on Praslin and La Digue is the same as on Mahe, Dr Payet said this shows the importance the government attaches to the economic sectors on these islands regardless of additional costs of fuel transportation and storage.

He noted that with the fuel price increases the government will need R5.5 million.
He said the government has agreed that no government ministries and departments will get extra money for fuel.

He said they will all have to cut down on their energy consumptions, adding that there are lots of areas where this could be applied.

He also noted that as consumers a lot can be done to reduce energy consumption at home and the energy conservation education would take all this into account.

Dr Payet stressed it is important to take into account that Seychelles imports all its refined oil from the international market and pays the same prices as other countries.

He added that  based on international reports  among the most important factors affecting the price of crude oil for the past few months are the European economic crisis linked to the euro and dollar exchange rates, increasing demand for fuel by fast developing economies like China, India and Japan, which has had to close down its nuclear energy stations after last year’s earthquake and tsunami, crisis in the Arab world which has resulted in Saudi Arabia recently increasing its crude oil productions and the fact that many oil drilling stations are now situated in deep seas, increasing the costs of exploration.