The Cayman Islands Government has temporarily removed import duties on gasoline and diesel as it moves to soften the impact of rising global fuel prices tied to tensions in the Middle East.
The Fuel Relief Programme took effect on 1 June and will remain in place until 30 September.
Under the current tariff structure, gasoline imports normally carry duty of 75 cents per imperial gallon.
Diesel sold at service stations is taxed at 85 cents per imperial gallon, while diesel imported for electricity generation attracts duty of 25 cents per imperial gallon.
Finance minister Rolston Anglin said in a press release the government cannot control international fuel prices, shipping costs or wholesale fuel supply conditions, but is using available policy measures to reduce pressure on consumers and businesses.
The Ministry of Finance and Economic Development said the programme is being implemented alongside the Utility Regulation and Competition Office (URCO) and Customs and Border Control.
According to the government, wholesale fuel suppliers will receive duty credits for all duty-paid gasoline and diesel remaining in storage tanks as of 31 May.
Those credits will later be offset against future duty payments after the temporary waiver ends in October.
Officials said the system was designed to ensure lower wholesale prices take effect immediately while preventing any supplier from gaining a competitive advantage.
Before the programme started, URCO and Customs and Border Control were expected to measure wholesale fuel inventories across the islands.
Fuel wholesalers also agreed to issue revised wholesale prices to retailers from 1 June, while retailers were encouraged to reduce existing duty-paid stock before the exemption took effect to speed up lower prices reaching motorists.
Despite the waiver now being active, the ministry said drivers may not see immediate price reductions at service stations because some fuel currently being sold was imported before the exemption began and already had duty applied.
According to the government, larger service stations could begin showing lower prices during the first week of June, while smaller stations may not reflect the changes until the second week of the month.
URCO chief executive officer Sonji Myles said the regulator would continue monitoring fuel prices throughout the supply chain and could intervene if operators fail to comply with the purpose of the programme.
Officials also warned that pump prices could still remain unchanged or rise if increases in global fuel prices offset or exceed the value of the duty relief.
The government said the Fuel Relief Programme forms part of its wider Three-Phase Energy Relief and Resilience Plan.
This also includes temporary electricity fuel charge relief, the planned return of the CHEER energy efficiency programme and longer-term renewable energy initiatives.
