Burma increases price of rationed fuel
Burma increases price of rationed fuel
in Bangkok
Published: August 15 2007 16:31 | Last updated: August 15 2007 16:31
Burma’s ruling military junta unexpectedly raised the price of rationed fuel by as much as 500 per cent on Wednesday, a move likely to drive up the price of food and other essentials and further squeeze the country’s already struggling poor.
The secretive regime gave no warning of the increase or any public explanation for the move. But analysts said the decision to slash fuel subsidies probably reflected a cash crunch as the regime pours resources into showcase projects such as the construction of a new capital city.
“I think they are hard up because of this new capital,” said a Rangoon-based analyst, who asked not to be identified. “I have a feeling they don’t have any money.”
The price of state-rationed gasoline rose from $1.16 to $1.94 an imperial gallon, while the diesel price rose from $1.16 to $2.33, hefty mark-ups in a country where a typical teacher’s salary is just $30 (€22, £15) a month.
The price of compressed natural gas, which the government has promoted as fuel for commercial vehicles, was raised 500 per cent – from 39 cents for a 65-litre canister to $1.94 a canister.
Residents of Rangoon, Burma’s former capital and largest city, said many buses and taxis, caught off guard by the steep increase, remained off the road, while others raised their fares.
The price of rice and other commodities is expected to surge as a result of higher transport costs, further fuelling inflation that independent estimates already suggest is running at 60-80 per cent this year.
“It’s really going to hurt poor people,” said one analyst. “It’s going to be terrible.” Besides running cars, diesel is also used by many families and shopkeepers to run small power generators in the face of blackouts.
In February, a handful of irate Rangoon residents staged a rare and dangerous protest against the repressive military government, blaming it for soaring inflation and long power cuts.
The protest was rare in that it challenged the regime’s basic competence rather than its moral legitimacy. Some participants were detained for questioning the following month but were freed after being given stiff warnings against similar protests in the future.
State-subsidised fuel plays an important role in the survival strategies of many ostensibly “middle-class” families in Burma’s deeply ailing economy. Car owners are allotted two gallons of subsidised fuel each day. But many immediately sell their rations for higher prices on the black market, using profits to supplement paltry government salaries or pensions. “Some people just live on this,” said the analyst.
The rise in the price of rationed fuel is expected to result in higher black market prices for fuel as well.
Burma last raised prices for rationed fuel in October 2005, increasing prices nearly nine-fold.
The Financial Times Limited 2007
in Bangkok
Published: August 15 2007 16:31 | Last updated: August 15 2007 16:31
Burma’s ruling military junta unexpectedly raised the price of rationed fuel by as much as 500 per cent on Wednesday, a move likely to drive up the price of food and other essentials and further squeeze the country’s already struggling poor.
The secretive regime gave no warning of the increase or any public explanation for the move. But analysts said the decision to slash fuel subsidies probably reflected a cash crunch as the regime pours resources into showcase projects such as the construction of a new capital city.
“I think they are hard up because of this new capital,” said a Rangoon-based analyst, who asked not to be identified. “I have a feeling they don’t have any money.”
The price of state-rationed gasoline rose from $1.16 to $1.94 an imperial gallon, while the diesel price rose from $1.16 to $2.33, hefty mark-ups in a country where a typical teacher’s salary is just $30 (€22, £15) a month.
The price of compressed natural gas, which the government has promoted as fuel for commercial vehicles, was raised 500 per cent – from 39 cents for a 65-litre canister to $1.94 a canister.
Residents of Rangoon, Burma’s former capital and largest city, said many buses and taxis, caught off guard by the steep increase, remained off the road, while others raised their fares.
The price of rice and other commodities is expected to surge as a result of higher transport costs, further fuelling inflation that independent estimates already suggest is running at 60-80 per cent this year.
“It’s really going to hurt poor people,” said one analyst. “It’s going to be terrible.” Besides running cars, diesel is also used by many families and shopkeepers to run small power generators in the face of blackouts.
In February, a handful of irate Rangoon residents staged a rare and dangerous protest against the repressive military government, blaming it for soaring inflation and long power cuts.
The protest was rare in that it challenged the regime’s basic competence rather than its moral legitimacy. Some participants were detained for questioning the following month but were freed after being given stiff warnings against similar protests in the future.
State-subsidised fuel plays an important role in the survival strategies of many ostensibly “middle-class” families in Burma’s deeply ailing economy. Car owners are allotted two gallons of subsidised fuel each day. But many immediately sell their rations for higher prices on the black market, using profits to supplement paltry government salaries or pensions. “Some people just live on this,” said the analyst.
The rise in the price of rationed fuel is expected to result in higher black market prices for fuel as well.
Burma last raised prices for rationed fuel in October 2005, increasing prices nearly nine-fold.
The Financial Times Limited 2007
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