VZCZCXRO4919
PP RUEHQU
DE RUEHPU #1555/01 3111857
ZNR UUUUU ZZH
P 061857Z NOV 08
FM AMEMBASSY PORT AU PRINCE
TO RUEHC/SECSTATE WASHDC PRIORITY 9097
INFO RUEATRS/DEPTTREAS WASHDC PRIORITY
RUEHZH/HAITI COLLECTIVE PRIORITY
RUMIAAA/HQ USSOUTHCOM J2 MIAMI FL PRIORITY

UNCLAS SECTION 01 OF 02 PORT AU PRINCE 001555 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/CAR 
STATE PASS AID FOR LAC/CAR 
TREASURY FOR ERIN NEPHEW 
 
E.O. 12958: N/A 
TAGS: EAID ETRD ECON PGOV PREL HA
SUBJECT: HAITIANS DISSATISFIED WITH SLIGHT PRICE DECREASE AT PUMP 
 
REF: A) PORT-AU-PRINCE 936 
 B) PORT-AU-PRINCE 874 
 
1.(U) This message is sensitive but unclassified --please protect 
accordingly. 
 
Summary 
-------* 
 
2.(SBU) Pump prices for fuel were reduced slightly by the GoH 
effective October 21. Public transport drivers, the Association of 
Fuel Distributors (ANADIPP) and a number of Senators have called for 
even lower prices and are dissatisfied by the small adjustment. 
There was no price decrease on 95-octane gasoline and decreases of 6 
*11 percent on 91-octane gasoline, diesel and kerosene.  Many 
Haitians expected an immediate, significant decrease in pump prices 
as the world market price for oil decreased by fifty percent. 
Haiti, however, operates on a ''first in, first out'' system. 
Petroleum company representatives anticipate a larger decrease in 
pump prices in early November as companies will operate from a 
cheaper supply.  However, an eventual fifty percent decrease is 
unlikely as the GoH attempts to recover from its USD 45 million of 
foregone revenue resulting from the April-July petrol subsidy 
program.  The high cost of fuel has dramatically increased the cost 
of transport and contributed to higher domestic food prices, thereby 
further weakening the purchasing power for a majority of Haitians. 
End Summary. 
 
Dissatisfaction with Pump Price Decrease 
---------------------------------------- 
 
¶3. (U) The GoH announced a pump price decrease October 21 of 
11 percent on 91-octane gasoline, from 235 HTG (USD 5.82) to 209 HTG 
(USD 5.20); a six percent decrease on diesel from 171 HTG (USD 4.28) 
to 160 HTG (USD 3.96 ); and a 10 percent decrease on kerosene from 
168 HTG (USD 4.20 ) to 150 HTG (USD 3.73 ).  There was no price 
decrease on 95-octane gasoline at 247 HTG (USD 6.18) attributed to 
overstock from former shipments.  Many Haitians expected a 
considerable price reduction for fuels on the local market as world 
oil prices decrease to below USD 70 per barrel. A Haitian Public 
Trnsport Drivers Association (APCH) representative tod the media 
on October 22 that gasoline 91 shoul have been reduced to 125 HTG 
(USD 3.13).  Publi transport drivers, the Association of Fuel 
Distibutors (ANADIPP) and Senators Michel Clerie, YvonBuiseith, 
and Andries Riche have called for evenlower prices and are 
dissatisfied by the small ajustment.  Petroleum product prices are 
regulate by the Ministry of Finance and Economy.  Customs uties, 
verification fees, finance fees and transort costs are added to the 
Cost, Insurance and Fright (CIF) price to determine the pump price. 
 
 
Additional Decreases on the Horizon 
------------------------------------ 
 
4.(SBU) The Chevron/Haiti Finance Manager, Karlyle Raphael, told 
Econoff October 22 that he expects the GoH to reduce prices again at 
the pump by one-third during the first week of November.  National 
(Dynasa/Haitian petroleum company) Financial Controller Michel 
Guerrier told Econoff October 29 he expects an estimated 70 HTG (USD 
1.75) per gallon decrease on gasoline 91 and diesel the first week 
of November.  He noted that this reduction should occur if the 
government follows the trend of the first in, first out system 
operating from petrol products purchased at a cheaper price. 
Fuel Taxes Explained 
-------------------- 
 
5.(U) The GoH collects approximately USD 62.7 million annually from 
tariffs and taxes on fuel imports (Note: Petroleum products account 
for 20 percent of Haiti's imports. End note.)  Tariffs on fuel 
imports represented approximately 25 percent of the GoH's total 
customs revenue for fiscal year 2008, amounting to USD 48.4 million. 
 Under a 1949 Haitian law, the GoH imposes a 57.8 percent tariff, a 
four percent of product value tax for ''verification fees,'', and 
both fixed and variable excise taxes to the CIF price of gasoline. 
Diesel and kerosene are exempt from the tariff.  (Note: 
Approximately 25 percent of vehicles and 90 percent of generators 
function on diesel. End note.)  A 1995 amendment to fuel tax levels 
dictates fixed excise taxes per gallon for gasoline, diesel and 
kerosene at 6.8 HTG (17 cents), 4 HTG (10 cents) and 0.44 HTG (1 
cent), respectively.  The GoH reduced tariff, verification fees and 
excise taxes during the April-July petrol subsidy program intended 
to ease economic pressure on the population.  Chevron's Raphael told 
Econoff October 27 the GoH would not allow pump prices to decrease 
at the same rate as world oil prices, since it intends to recover 
from its 1.8 billion HTG (USD 45 million) of foregone revenue 
attributed to the earlier fuel subsidy program. 
 
PORT AU PR 00001555  002 OF 002 
 
 
 
Local Transport Prices Continue to Rise 
---------------------------------------- 
 
6.(U) APCH and other critics expect that the pump price ''relief'' 
will not reduce already-existing tension between mini-bus 
(''Tap-tap'') drivers and passengers.  Tap-tap drivers have 
increased fares and sub-divided routes into shorter segments in an 
effort to cope with the high price of fuel.  Many Haitians spend 
over 30 percent of their income on transportation.  Higher fares and 
transportation costs disproportionately affect poor Haitians, most 
of whom earn less than USD 2 per day, and for whom Tap-taps are the 
only affordable form of transport available.  High fuel and 
transportation costs, along with poor roads made worse by the four 
consecutive hurricanes of August-September, have contributed to 
dramatically increased food prices.  Domestic food costs, according 
to the Haitian Institute of Statistics, are up 20 percent for the 
last 12 months, while the cost of imported food, which makes up more 
than half of total consumption, is up 37 percent.  For the quarter 
ending October 1, a six-pound bag of imported rice went from 19 HTG 
(USD 0.48 cents) to 35 HTG (USD 0.88 cents), an 84 percent increase, 
and the cost of a six-pound bag of local black beans increased by 62 
percent. 
 
Comment 
------- 
 
¶7. (SBU) Haiti has been particularly hard-hit by high oil prices 
over the past year.  Despite dramatic drops in the price of oil in 
recent weeks, price relief at the pumps will take some time as Haiti 
operates on a first in, first out shipment system, and the GoH goes 
back to the practice of deriving badly-needed revenue from fuel 
imports.  The GoH seems determined now to set pump prices based upon 
the cost of the current supply.  Meanwhile, Tap-tap drivers are 
threatening to strike and social unrest due to the continuing high 
cost of fuel and public transport could grow.  A public awareness 
campaign on the fuel price structure could be one way for the GoH to 
respond to discontent and forestall unrest. 
 
SANDERSON