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Goods prices surge under control - Minister
January 5, 2015, 9:04 am
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Deputy Prime Minister and Minister of Commerce and Industry Abdulmohsen Al-Madaj

Deputy Prime Minister and Minister of Commerce and Industry Abdulmohsen Al-Madaj on Sunday said the ministry is eager to control prices of goods that surged following a recent cut of diesel and kerosene subsidy.

The recent unjustified surge in prices was curbed and up to 70 violators could be prosecuted, the Minister told a press conference, together with Minister of Finance Anas Khaled Al-Saleh, and Minister of Oil and Minister of State for National Assembly Affairs Ali Al-Omair.

The subsidy-cut decision is part of a review by the cabinet of a series of subsidies, just as most world countries do occasionally, Al-Madaj said. According to a cabinet resolution taken last October on lifting subsidies of some materials, the ministry is tasked over six months to follow with probing the implications of enforcing it, he noted.

This is the task the ministry is now fulfilling, namely identifying and assessing consequences, Al-Madaj said, noting that most impacts were expected. The ministry is responsible for disciplining prices and curbing unjustified rises in line with law 10/1979.

Violators have been summoned for investigations and are poised to be referred to prosecution. If convicted, licenses could be withdrawn, he said. Al-Madaj said the recent hike in prices of such commodities as bakeries and drinkable water have been contained since the first day of the cut of subsidy for diesel fuel.

"In collaboration with competent state departments such as the Public Authority for Agriculture and Fish Resources (PAAFR), Kuwait National Petroleum Company (KNPC) offers payments to farmers, fishermen and industrialists," the minister said.

Al-Madaj called on persons or entities that were affected by the cut in subsidy to diesel fuel to apply for payments from the KNPC. "Some companies and drivers of drinkable water tankers took advantage of decision on fuel and illegally ratcheted up the prices and fees of their respective products and services on the second day of the implementation of the decision," he said, noting that 70 of these entities and persons were booked and referred to the Public prosecution pending a legal action.

"Aware of the unpopularity of the subsidy cut for the Kuwaiti society, the Ministry of Commerce and Industry is working with other state departments to address the ramifications of this decision in the coming six months," he said, noting that the move is part of economic reforms.

Al-Madaj affirmed that his ministry will take stock of all observations raised in this regard by MPs who have "the constitutional right to interpellate any cabinet member." On his part, Minister of Finance Anas Khaled Al-Saleh said the ministerial committee on subsidy is working to rationalize subsidy and ensure that it goes to those who deserve it.
He ruled out the possibility of total cancellation of subsidy, affirming that the government focuses on how to ensure justice and rationalization.

"The cabinet decree to cut subsidy for diesel fuel is only applicable to retail outlets such fuel stations. "The ministerial committee works to contain the impacts of the decision on industrial, farming and fishing sectors, and addresses any complaints in this regard," Al-Saleh pointed out.

The minister affirmed that there will be no leniency or tolerance in dealing with law violators who unjustifiably hiked the prices of their products or services. "The subsidy cut decision hasn't been made abruptly or haphazardly; it is rather the result of two years of study of economic reforms. The recommendations made in this regard since 2013 guarantee that the fixed income people.

"The total value of subsidy for diesel fuel in the budget of last year amounted to KD 280 million when the global fuel rates were far higher than now," he said, expecting that the subsidy cut will reflect positively on the new state budget.

Al-Saleh ruled out the possibility of inflationary impacts of the move, affirming that his ministry keeps a vigilant eye on the consumer index, with a view to balancing inflation rate against recession indicators. Meanwhile, inister of Oil and Minister of State for National Assembly Affairs Ali Al-Omair stressed that there will be no backing down on cutting subsidy for diesel fuel under the cabinet decree of October 15, 2014.

He advised industrialist, famer and fisherman unions to present their papers to KNPC local marketing divisions to receive payments in damages.

"The diesel fuel subsidy cut will have two positive impacts - one economic and the other security; it will be helpful for the economy and enable funding for other forms of subsidy, it will help prevent smuggling of diesel fuel abroad, thus saving millions of dinar for the state treasury," Al-Omair made clear.

He added that the cabinet meeting on last October 15 decided to postpone debate on cutting subsidy for petrol, electricity and water.

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