Minister of Energy Kevin Ramnarine expects that the country will save "hundreds of millions of dollars" when the subsidy on premium fuel is lifted today.
In a telephone interview yesterday just after the 2012-2013 budget reading, Ramnarine said at the close of fiscal 2012, the fuel subsidy stood at approximately $4.47 billion.
Premium gasoline, he said, accounted for six per cent of the subsidy.
To use Ramnarine's figures, cutting that subsidy will save approximately $270 million per year.
"The thinking behind that was that the people who use premium are in the higher income bracket and as such it might not be a major impact on them as they have higher levels of disposable income," said the Minister.
Ramnarine said he worked closely with Finance Minister Larry Howai for this year's budget presentation.
"The Ministry of Energy is responsible for a large portion of the country's revenue and this year's budget was predicated on US$80 a barrel and that was supported by the Ministry of Energy," he said.
Ramnarine said that price was driven by continued growth in the demand for fuel by the BRIC countries—Brazil, Russia, India and China—and by the continued political instability in the Middle East.
This year's budget was also predicated on a US$2.75 mmbtu (Million Metric British Thermal Units) for natural gas, just like last year and the year before.
"But estimates show it settled at US$2.85, which surpassed the (natural) gas price," he said.
"Given the high cost of natural gas in Asia, South America and Europe, that figure should be realised in 2013," added Ramnarine.
Oil companies contributed 15 per cent of the $4.47 billion subsidy, while the Government paid the other 85 per cent.