The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

A Cabinet minister is voicing hope that reductions in global oil prices and energy costs will give Bahamian petroleum retailers some relief outside their long-desired 30 cents per gallon margin increase.

Michael Halkitis, minister of economic affairs, told Tribune Business the Government is still against granting the industry a margin increase for fear it will increase costs at the pump for consumers. His restatement of the Government’s position comes as the Bahamas Petroleum Retailers Association last week argued that the drop in global oil prices means “this is the time” to approve a rise.

“It’s going down, it’s starting to trend down,” Mr Halkitis said of global oil prices. “We have to watch it to see what it does. And, in some forecasts, it will continue to trend down particularly because of slowing of growth in China, which drives a lot of prices. But we have to keep an eye on it.”

Rejecting retailers calls for a margin increase, the minister added: “We continue our discussions with them. Again, we recognise the difficulty that they’re in. That is why we brought some temporary relief last year to them. We’re hopeful that we can see soon some reduction in electricity costs, which impacts them..... see that start to level off and trend downwards and then, of course, gas prices affects that as well.

“We explained to them that we don’t want a situation where we’re adding directly to the price. So we’re looking at some different permutations of things that might happen. Some ways you can address it without increasing the price at the pump, and continue to look at that because it’s not an easy situation. So we thank them for their forbearance and we’re committed to work.”

The Government in 2022 sought to give Bahamian petroleum dealers “breathing room” by providing the industry with tax rebates totalling $6m - $5.5m in cash and $500,000 as offsets to some of the taxes owing by operators.

However, Raymond Jones, the Bahamas Petroleum Retailers Association’s (BPRA) president, told Tribune Business that implementing the industry’s margin increase now would still result in a “net” reduction in gasoline prices for consumers and fulfill the Government’s objective of not imposing further cost hikes on the public.

He added that the previous week’s price drop of around 64 cents per gallon had given the Government sufficient space to implement the margin increase without hurting Bahamian consumers, which would ensure retailers can survive in an environment where their fixed, inflexible margins have been “eaten up” by multiple cost hikes due to the inflation that has dominated the post-COVID economic landscape.

“The current situation is this,” Mr Jones told this newspaper. “The Government has maintained a position that it cannot do anything that drives the price up. In the last week, we had a 64 cent decrease in the price of fuel in one day.

“It’s time to shake the tree a bit. The price has dropped significantly. This is the time to give us an increase of 25 cents. That’s a net, net win. The consumer will still see a 39 cents drop in the pump price. If you are waiting for it to drop, you got the drop. We don’t want the increase to take away the drop. We only want a portion of that so it allows us to survive.

“Retailers are on the verge of closing down. It’s almost impossible to operate with the current margins and current operating cost expenses. We need relief, and are only asking for 25 cents a gallon. We understand the Government’s position, not wanting to put more cost on the public. We understand that,” he added.

“But as business people we need to be able to maintain our employees, pay our bills and stay in business.” Mr Jones said the 25 cents increase in the gasoline margin that the Association and its members are now seeking would likely increase the average road user’s weekly fuel bill by less than $5.

“We’re asking the Government to support us, help us out and give us an increase so we can survive,” he pleaded anew. “Many retailers have been talking about throwing away the keys. I said: ‘Hold on. The Government’s got to see a way through to give us an increase so we can survive’,” he added.

“This is the time. If they give a 25 cent per gallon increase the consumer will see a net decrease of 40 cents per gallon. We feel that if they do that the price will still go down significantly. This is the time to give us a margin increase so we have hope of staying in business.

“At the end of the day, petroleum retailers are very, very frustrated at not being able to make money and are simply spinning the wheels, paying the cost of electricity, paying the cost of operations. People are so frustrated. They want to stop all gas and diesel sales and close up. That’s not good for the economy as there will not be enough service stations to meet demand,” Mr Jones said.

“Twenty-five cents would be a small increase to keep these retailers and entrepreneurs in business. It’s been 12 years since the last margin increase, and look at all the costs that have gone up in that time. It’s absolutely ridiculous we’re at this point. We’ve been talking to this administration for the last two years for 25 cents per gallon. Something needs to change.”