Fiji's high cost of fuel will see revised fuel pricing template parameters from June.
This was as recommended in the "2006 Distribution Cost and Return on Investment Review" - January 2007 findings by the Pacific Islands Forum Secretariat.
Cabinet's decision to endorse the new parameters for fuel prices was welcomed by stakeholders yesterday.
Fiji Motor Traders Association vice president Ian McLean said it appeared it was fair for the motoring public.
Mr McLean said the association believed fuel quality needed to be improved by the introduction of sulphur free diesel fuel.
Attempts to contact Fiji Bus Association president Pyara Singh were unsuccessful.
Interim Finance Minster Mahendra Chaudhry said the cost of fuel had been increasing over the past 24 months because of the rigid global supply and demand.
"The market remains volatile, and while it has shown some signs of decrease over the last four months, there remains a high possibility that prices will increase further in 2007."
Mr Chaudhry said retail and wholesale prices of fuel were set by the Prices and Incomes Board (PIB) based on the Fiji Fuel Pricing Template (FFPT) 2005 which determine the prices over a specified review period.
"The FFPT translates international market pricing for petroleum products, freight, operating costs and profit allowances into recommended wholesale and retail prices on a two monthly basis," Mr Chaudhry said.
"Maximum wholesale and retail prices are based on the most competitive operator in Fiji.
"Fuel prices are affected by a combination of international and local factors, namely: Singapore fuel prices (reflecting world prices); import freight and associated cost; oil company head office/offshore charges; company cost allocations between market sectors; company cost recovery from other pacific islands; fuel tax issues; fuel quantity issues; dangerous goods inspection and enforcement; outer island supply economics and options; and waste oil collection and management."
He said the 2006 review recommended changes to the parameters in the current pricing template which were adopted in 2005.
The review of distribution costs and return on investments for the petroleum sector is done annually. The review recommendations will be implemented in June 2007.
