Petrojam absorbed nearly US$22.7 million, about J$3.6 billion, in fuel price increases between late February and the end of May, and the two officials who have spoken publicly on recovering that money have described different routes.

Energy Minister Daryl Vaz told the House of Representatives on July 14 that the accumulated subsidies for the current financial year are expected to be “recovered over time through the pricing mechanism” as global prices normalise. He was responding to questions from Opposition energy spokesman Phillip Paulwell.

A week later, Petrojam Chairman Metry Seaga said the Government would have to repay the refinery. Speaking on a panel at the release of the second-quarter JCC/GK Capital Consumer Indices, Seaga said Petrojam had spent about US$18 million subsidising fuel and that “the money has to come from somewhere.”

The two positions imply different payers. Recovery through the pricing mechanism would mean motorists and businesses repay the shortfall through ex-refinery prices that fall more slowly than the US Gulf Coast benchmark. A reimbursement from the Government would place the cost on the central budget.

No transfer to Petrojam for the fuel absorption has been announced.

The size of the bill is also unsettled. Petrojam’s own June 10 statement put the absorption at nearly US$22.7 million over three months. Seaga’s July figure of about US$18 million “to date” is lower, though it was given later.

The shield operated through a cap on weekly price movements. Vaz told the House on May 5 that transport fuel prices rose about $49.20 per litre between March 12 and April 8, of which $18 was passed on, with Petrojam absorbing the remainder. In April he said holding the cap to June would cost $11.8 billion, which he called “unaffordable and unsustainable”.

The cap was then loosened. Petrojam said the maximum weekly pass-through on automotive diesel and ultra-low sulphur diesel would move from $4.50 to $12.50 per litre from June 11. The company said the mechanism applies in both directions, which is the feature that would allow recovery as prices fall.

The Opposition has argued for a third option. Paulwell said in April that if the Government wished to help consumers it should reduce its tax take at the pump and not push Petrojam into further losses.

Market conditions have since moved in the direction Vaz’s approach requires. Brent crude was about US$101 per barrel on October 5, down from above US$110 in August, and Petrojam’s 87-octane billing price was J$209.62 per litre on October 1, down from above J$220 earlier in the year.

Petrojam has not published how much of the shortfall, if any, has been recovered since June, or the period over which it expects to recover the balance.