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Gas Station Dealers Eye 45-50% Margin Growth

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

Petroleum dealers want “at least a 45-50 percent” margin increase if gas stations are to remain open once the COVID-19 pandemic has come to an end.

Vasco Bastian, the Esso station owner at East Street and Soldier Road, told Tribune Business: “We still want that margin increase after COVID-19. If you want all of these gas stations to remain open in The Bahamas you have to consider the margin increase sooner rather than later.

“We are here to provide a service to the Bahamian people. We need at least a 45 to 50 percent margin increase, or convert the current formula to a percentage base, bearing in mind we have a minimum percentage base and factoring any type of gross operation growth or additional operational cost over time in the future. So you have to convert the fixed margin to a percentage base, based on the future price index and the future cost increase.”

“We in this business are heavily regulated by government,” Mr Bastian added. “So government basically sets the price of gas. Government gets nearly $2 per gallon of gas, the wholesalers get 33 cents and the retailers get 54 cents. It is similar on diesel.

“At the end of the day, you may as well say we are working for the government indirectly. The government is reaping more benefits from the petroleum people than the actual people who have invested their money, the time and the effort.”

Gas station operators are effectively in a volume business due to the price controls imposed by the government on their business. However, while margins have remained fixed, dealers have had to contend with minimum wage and national insurance increases and the rising cost of purchasing fuel.

Mr Bastian added: “The last time we had an increase was when Hubert Ingraham was prime minister, so it had to be at least eight or nine years ago. We had a margin increase and he still owes us five percentage points from that. He said he would give us 20 percent, then he gave us 15 percent and told us he would come back and add on another five percent.

“The Government also needs to stop charging gas station owners and operators business license fees on gross. It has to be on net profit. It is dishonest when consecutive governments charge business owners in the petroleum industry on gross turnover. It’s false and it is not right.”

Calling for gas station operators to be allowed to earn a percentage of every gallon they sell, rather than a fixed margin, Mr Bastian added: “We can agree to disagree on the percentage amount. I’m not going to say make it 10, 20 or 40 percent, but it has to be a profitable percentage base.

“It has to be a percentage base where there is profitability. It has to make sense for all parties involved. The Government continues to be the money maker when it comes to the petroleum industry.

“We are tired of playing dead and we need the Government to sit down with us and we need a sensible, decent conversation with the government. We need to meet with the Prime Minister or the minister for finance to discuss the way forward in this industry.”

As for holiday weekend sales despite the COVID-19 emergency orders and the hurricane, Mr Bastian said: “Business is good, because we provide an essential service even though we don’t get the recognition from the Government.

“The Government always leaves us out in the dark. They always inform us at the last minute, especially since we could have been open yesterday and they informed us the evening before. They don’t even thank us for our services. The Competent Authority thanks everybody else except for the gas station operators.

“Tell the Prime Minister he can tell us ‘thank you’. He doesn’t have to come to us person to person, but I am proud to play my part in providing an essential service for the people of The Bahamas. The commitment has always been about the people of The Bahamas.

Mr Bastian added: “Governments come and go, but I will always be committed to The Bahamas and Bahamians. I was a little disturbed that they told us that we can open up at the last minute, but I am going to make the best out of it.

“I have some loyal people who work for me and I treat them well and they are kind to me. I am only a success because of the people I have surrounded myself with over the years, and that means good cashiers, good pump attendants and good support staff.”

Mr Bastian said there was “more than an abundance of fuel” for customers during the holiday weekend, despite the COVID-19 lockdown fears. He added that fuel is the “last thing” Bahamians should worry about.

Comments

Proguing 1 month, 3 weeks ago

Everybody is hurting and right now Bahamians cannot afford any increase in the price of fuel.

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tribanon 1 month, 3 weeks ago

Just think how inexpensive gasoline would be if Sir Snake and Focal/Shell were taken out of the equation. Gasoline is currently selling at pumps in Florida for a little over US$2 per gallon and that includes heavy Federal and State imposed taxes. Other than insatiable greed, there's really no reason why gasoline on New Providence should be selling for more than a dollar over the price per gallon in South Florida.

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