Prime Minister Dr. Godwin Friday Tuesday outlined a series of initiatives aimed at dealing with the rising cost of living in St. Vincent and the Grenadines, with the immediate emphasis being on lowering the soaring cost of electricity.
Speaking on the state-owned NBC Radio, Prime Minister Friday said his eight month-old New Democratic Party (NDB) administration, which came to office in November last year after 25 years of being in the opposition, is ‘constantly reviewing’ ways to cushion the population from the surge in energy prices triggered by the war in the Middle East and its impact on global oil markets.
‘The surcharge is too high, but it’s still lower than it could have been because of the measures that we have instituted,’ Friday said, adding that the government and state-owned St. Vincent Electricity Services Limited (VINLEC) must both ‘bear some of the costs’ rather than passing them on to the consumers.
Prime Minister Friday told radio listeners that electricity is the most immediate and visible pressure on household budgets and business operations, noting that ‘when VINLEC prices go up, essentially the surcharge is passed on to consumers and to businesses.
It affects everybody…I have total sympathy with the families who are struggling to make ends meet because of increasing energy prices,’ Friday said, adding that his administration moved early, announcing measures in May to blunt the impact of rising diesel prices used in electricity generation.
He said these steps included removing the fuel surcharge at the port on diesel imported by VINLEC, reducing or removing the excise tax on that fuel to keep VINLEC’s input costs down and pressuring VINLEC to absorb part of the fuel increase instead of fully passing it through to customers.
Friday said that in July, VINLEC absorbed ‘over EC$730,000′ (One EC dollar=US$0.37 cents) that would otherwise have appeared on consumers’ bills.
He said without those interventions the fuel surcharge would be ‘over 90 cents per kilowatt hour’ – a level that would put ‘a lot of pressure on households, businesses and the economy at large’.
Friday urged VINLEC not only to share the burden of higher fuel costs, but also to reconsider its disconnection practices in the current climate.
‘VINLEC also has to understand that they can’t rush and cut off people in the same time frames that they used to… We have to all have some more grace and simply say we are trying to work our way through this crisis.’
The prime minister acknowledged that the current subsidies and tax relief on fuel are essentially short-term tools designed to ‘cushion’ an externally driven price shock and agreed that permanent relief must come from structural changes in the energy sector, not endless subsidies.
He said his longer term strategy includes reducing vulnerability to oil price shocks by investing in renewable energy and ‘more sustainable energy systems that are now affordable,’ mandating VINLEC to lead the transition, rather than treating renewables as a competitor to the utility:
‘VINLEC has to lead the way… so that we become more sustainable in our energy supply,’ he said, adding that the government would continue to remove or reduce fuel taxes ‘within the constraints that we find ourselves in, with tightened government finances’,
But he told radio listeners that the country cannot rely indefinitely on fiscal giveaways to keep electricity prices in check.
Beyond electricity, Prime Minister Friday outlined a suite of initiatives to ease everyday expenses, particularly for low-income households and families with school age children.
The government is banking on periodic value added tax VAT-free days to provide direct, visible relief:
He said the first VAT-free day in December 2025 generated a ‘phenomenal’ response and ‘a frenzy’ in Kingstown and that the second VAT-free day is scheduled for August 28, specifically targeted at back to school shopping, rather than the general VAT-free day in December.
Prime Minister Friday said businesses were given more advance notice after some complained that they had underestimated demand in December, urging retailers to match the state’s sacrifice by offering their own discounts.
Friday linked the VAT-free day to a broader philosophy of targeted protection for vulnerable groups during the current squeeze.
Among the measures he highlighted was the government’s increase of public assistance to EC$500 per month and support for poor and vulnerable persons to prevent them being ‘crushed by the current circumstances’.
He noted that the government has also removed registration fees for secondary schools and the Community College and will pay for the exam fees for the upcoming cohort of students leaving secondary school.
‘You shouldn’t get to form 5 and then you’re basically out there with a sponsor sheet to write eight or ten subjects… That’s part of your education. The state will take care of that responsibility,’ Prime Minister Friday told the nation.