The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

Petroleum dealers yesterday said they were “shocked” after the Government ruled out increasing their per gallon margins despite a Cabinet minister revealing it was working to offer alternative help. 

Vasco Bastian, the Bahamas Petroleum Dealers Association’s (BPDA) vice-president, told Tribune Business he was “disappointed” at the Government’s inflexibility in maintaining the 54 cent per gallon gasoline margin for fear any rise would hurt consumers.

However, Senator Michael Halkitis, minister of economic affairs, told the weekly media briefing at the Prime Minister’s Office that the Davis administration was close to coming up with an alternative assistance proposal for an industry he admitted is “distressed” because of its fixed margins and high global oil prices.

The minister, who has consistently ruled out any increase in retail and wholesale margins because of the increased costs it will impose on already-hard pressed consumers, said: “As you know we have been having a series of meetings with retailers.

“They are very distressed. They are facing some enormous challenges. Our position is it will be very difficult for the Government to approve a margin increase at this time, which will only lead to higher prices at the pump and more pressure on the consumer.

“And so what we have been doing is having some discussions to find out ways for where we can bring relief to them directly based on the things that they are facing, inclusive of things like higher rents and franchise fees and increased amount of money that they have to outlay for inventory, meaning they have to spend more just to fill their tanks because of the rising prices,” Mr Halkitis added.

“We think we have some ideas and, as I’ve said before, they have put some positions to us, and we mull them over and our technical folks would come up with something that we think might work. We just need to agree internally and hopefully we could put something to them that could help them even if it’s a temporary measure until some of these issues subside.” Local gas is currently priced at well over $6 per gallon at all major providers in New Providence.

In response, Mr Bastian said: “If the minister meets with us along with the wholesalers, who basically control franchise fees, and if we can have a meeting together where we can come to some cap in regards to that, I think that would be good.

“I think they did that in the UK, because we provide such an essential commodity, and if the Government can work along with us to get the rent and the franchise fees and all of those other related and unrelated charges reduced, so we can make this profitable again, then we definitely will entertain that.” 

The Government has no control over what petroleum wholesalers - Rubis, Shell (FOCOL Holdings) and Esso (Sol Petroleum) -  charge retail dealers when it comes to franchise fees, rents and revenue sharing. Those are private contracts that have to be addressed by the parties, with the Government only controlling its per gallon tax take and the margins via price control.

“The government can facilitate any movement in this. The Government can advise us and help us in that area. The Government has the power. It can do anything it wants as they have the power to influence changes in that area,” said Mr Bastian. 

“When the gas prices were low we tried to reach out to the previous government and they wouldn’t even acknowledge us. The only good thing I would say about this government is that even though I’m disappointed, they at least entertained us on our suggestions and methods where the previous government didn’t.” 

No mention was made of any solution in Wednesday’s Budget, and Mr Bastian said of the Government’s stance on ruling out margin increases: “I’m disappointed because I continue to work, and I continue to try and believe that at some point we can come to some amicable arrangement so gas station operators throughout The Bahamas can become profitable again. 

“I’m just disappointed in the stance that was taken. When you have Bahamians in this business every day who provide an essential commodity, the minister does not want to show up to his favourite gas station to find that the gas station where he bought his gas from is no longer there because they can no longer afford to buy gas from the wholesalers.” 

The Association is also willing to forego its call for the Government to reduce VAT on gasoline, which Mr Bastian says “would not help the country”. He added: “I’m not discouraged. I just hope that they reconsider our proposals so we can get out of this mess that we’re in.”