Parliament’s Finance Committee yesterday approved guidelines for issuing MVR 100 million (US$6.4 million) worth of fuel subsidies for fishermen following consideration of revisions proposed by the fisheries ministry.
At a press briefing today, Finance Committee Chair MP Ahmed Nazim said that the guidelines were finalised in July but the committee had been unable to vote it through until now due to the reworking of committee composition and the suspension of parliament.
“Today we have informed the fisheries ministry of our decision,” Nazim said. “The sub-committee’s decision states that after deducting MVR 1 million for administrative costs, the remaining MVR 99 million should be used to subsidise the cost of fuel for each [fishing] trip based on engine horsepower.”
The People’s Alliance (PA) MP for Meemu Dhiggaru explained that the fuel subsidies would be released based on fuel consumption or engine horsepower (hp) instead of the size of the fishing vessel as was done previously.
Fishing boats would be divided into three categories based on engine horsepower, Nazim said, ranging from 2hp to 829hp and higher.
The rationale for the decision was to ensure that “as many fishermen as possible receives the subsidy,” he said.
Some 1,053 vessels eligible for the subsidy have been registered at the fisheries ministry, Nazim revealed.
Unlike the past two years, said Nazim, the Finance Committee has instructed the fisheries ministry to directly deposit the subsidy to the boat owner’s bank account and post details of the subsidy and recipient on a special website.
The new mechanism would allow crewmembers to calculate the portion of subsidy owed to them, he added.
Although only two months remained of 2012, Nazim suggested that the fisheries ministry could disburse the total amount before the end of the year.
The Finance Committee had calculated that the MVR 100 million annually would cover 20 percent of fuel costs for each fishing trip, Nazim explained, but the fisheries ministry could now provide a higher percentage of the cost.
The newly approved mechanism would have safeguards in place to avoid fraud, Nazim observed, as the subsidy would only be issued when the boat owner presents the fuel bill along with other documentation.
Asked if the state budget could bear the brunt of MVR 100 million as subsidies, Nazim conceded that the expenditure would strain the budget but argued that increased productivity in the fisheries sector would boost the flagging economy.
“I believe that if fishing improves through such a stimulus or incentive, the benefits to the economy would be felt broadly,” he said.
Concurring with the committee’s chair, Maldivian Democratic Party (MDP) MP Mohamed ‘Colonel’ Nasheed argued that the state should assist workers in the primary sector at a time of economic slowdown.
Noting that the MDP government pledged to make the Maldives carbon neutral in a decade, Nasheed said the previous administration had conducted research in collaboration with international universities into alternative sources of energy to replace marine diesel.
“I still believe that the permanent solution for this would be finding an alternative source of energy, for us to be able to use renewable energy for fishing,” the MP for Haa Dhaal Nolhivaram said.
Speaking at a press conference in June, Fisheries Minister Ahmed Shafeeu said the subsidy would “incentivise” many fishermen who were unable to fish due to high fuel prices.
“A lot of fishermen now use larger fishing boats which require more fuel. So they opt not to make trips if they can’t get a good catch after burning so much fuel. The fuel subsidy will encourage more people to go fishing,” said the minister.
Shafeeu said fishing in the Maldives has declined from approximately 185,000 tonnes of fish caught in 2006 to about 70,000 tonnes in 2011.
Meanwhile, in 2011, the MDP administration withheld releasing the subsidy citing insufficient funds in the state budget. Former Finance Minister Ahmed Inaz told parliament in October 2011 that the state would have to reduce other subsidies to release MVR100 million as oil subsidies for fishermen.
In the same month, the then-opposition Dhivehi Qaumee Party (DQP) sued the finance and fisheries ministries for withholding the budget allocated for fuel subsidies.
Former CEO of the Maldives Industry of Fisheries Corporation (MIFCO) Adil Saleem, who also held the position of Transport Minister in the former government, told Minivan News in June this year that encouraging a subsidised industry “completely reverses” the former government’s policies, although he said it was important for fishermen “in the current situation.”
“Subsidising is wrong,” Saleem contended, arguing that it did not address the core problems in the industry and was “not the solution for a sustainable industry.”
“Coup financiers are shaping the industry so that the fishermen act as their staff, going fishing everyday on subsidised fuel,” said Saleem.
However, he noted that fishermen were currently in “desperate need” of assistance due to the low prices they get for the fish, and said the subsidies should be released as a short-term measure.