AMMAN, 7 May 2003 — Jordan, which depended entirely on Iraq before the war for its oil needs, decided yesterday an across-the-board increase of petrol prices and other oil derivatives.
Officials said the new prices decided at a weekly Cabinet meeting will take effect today. Before the war Iraq supplied Jordan annually with 5.5 million tons of crude oil and by-products, half for free and half at preferential rates.
Under the new decision the price of petrol will rise by four to eight percent, industrial fuel by six percent, kerosene by eight percent and gas canisters used for cooking by 20 percent, officials said.
Motorists will have to pay 300 fils (42 cents) for one liter of normal petrol instead of 275 fils (39 cents) before the price increase while domestic gas canisters will now cost $4.2 instead of $3.52.
One ton of industrial fuel will be sold for $115 from today instead of $108 before the price hike.
The price increase announced yesterday is the second in less than two years.
Finance Minister Michel Marto said the government decided to increase prices because the government had spent an average of $30 per barrel of oil over the past four months.
The 2003 budget which was unveiled in February had calculated the cost of a barrel of crude oil at $26, Marto said.
“The difference implies a heavy burden for the budget. Every extra dollar constitutes a 20-million-dinar ($28 million) increase annually for the treasury,” Marto said.
Just over a month before the start of the US-led war on Iraq, Jordan posted in early February an “emergency” budget for 2003 with a projected deficit of 316 million dinars ($445 million), as it warned of the effects of a war.
Marto stressed that Jordan still does not know what deal it will be able to strike with a new Iraqi leadership concerning its future oil needs. Energy Minister Mohamed Al-Batayneh said earlier this year that Jordan’s annual energy bill would come to $1 billion if it were forced to do without Iraqi oil.
The government yesterday also decided to double its tax of basic food products as of June, from two to four percent. But it will offset the price hikes by increasing the monthly cost of living premium for civil servants by three dinars ($4.2), officials added.