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By Latonya Linton
KINGSTON, Jamaica, (JIS) – A tiered pricing mechanism is being implemented, which will see petroleum prices being more closely aligned to global price movements, minister of energy, transport and telecommunications, Daryl Vaz, disclosed during a post-Cabinet press briefing, held at Jamaica House on April 15.
Minister Vaz explained that while the current mechanism has been effective in cushioning consumers, it has resulted in significant financial losses by Petrojam of $1.3 billion to $1.4 billion in four weeks, which was not passed on to consumers. He noted that if elevated prices persist until June 2026, it will cost the government of Jamaica $11.8 billion, “which is unaffordable and unsustainable”.
Minister Vaz said cabinet considered the revised new tiered pricing mechanism, which is designed to allow for control and predictable adjustments, maintain consumer protection for smaller increases and enable greater flexibility during larger global oil price shocks.
“Based on the war in the Middle East, it has become necessary to make changes to the pricing mechanism used by Petrojam to respond to the pricing uncertainty. This will allow Petrojam to be more agile and respond in a timelier manner to price volatility,” the minister said. “What does that mean? It means that the $4.50 cap cannot be sustained, and it means that we’ll have to have several different tiers of caps, probably three, that will speak to what’s happening in the market,” he added.
The minister explained that Jamaica continues to experience weekly increases in fuel prices driven by upward movements in the US Gulf Coast benchmark, which is a primary reference for refined petroleum products in the region.
Minister Vaz said between March 12 and April 8, the full increase in transport fuel prices averaged $49.20 per litre.
“That would have been the increase based on the change in the oil prices. However, only $18 of that $49.20 per litre was passed on to consumers based on government of Jamaica’s pricing cap at Petrojam at $4.50 per litre per week, up or down,” he stated. “This was made possible through Petrojam’s pricing mechanism, which absorbed the remaining cost, amounting to approximately US$8.6 million, or $1.3 billion to $1.4 billion over the period. This was in order to cushion the impact on the Jamaican people,” he added.
Minister Vaz stressed that Jamaicans would continue to see increases, as long as the war in the Middle East continues.
“We will do what we can do but it is important that you do what you need to do to understand that you need to conserve, starting today. Government is going to have to look at policies to limit movements, especially transportation movements,” he said. “I don’t know whether or not we’ll go back to a COVID hybrid version of working from home, but something has to happen, because the level of traffic that I’m seeing on the road doesn’t show me that anybody realises that there’s a war and the price of fuel and oil is just continuing to go up and up and up.”
The minister further stated that cabinet will deliberate and that the government will come up with plans as to how to conserve, “but it is 100 percent the responsibility of every Jamaican to realise that we are in a major crisis as it relates to the price of oil internationally and, therefore, you need to take responsibility for your household and your business to see what you can do.”
“Despite the global market volatility, Jamaica’s energy security remains intact, supported by established finished product supply contracts and local refining capacity at Petrojam,” minister Vaz noted. The government will continue to closely monitor international developments, maintain a balanced approach between affordability and sustainability, and take timely and measured decisions in the best interest of the Jamaican people.
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