By NEIL HARTNELL
Tribune Business Editor
A gas station operator yesterday suggested a six-month job swap with a Cabinet minister so the latter can gain a full understanding of the industry’s plight, adding: “He’s telling us he wants us to fail.”
Vasco Bastian, the Bahamas Petroleum Retailers Association’s (BPRA) vice-president, told Tribune Business he was willing to exchange roles with Michael Halkitis, minister of economic affairs, so he can see exactly why the sector is pushing so hard for an increase in its price-controlled fixed margins.
Responding after Mr Halkitis, speaking during the Senate’s mid-year Budget debate, reiterated the Government’s continued opposition to any increase in gasoline or diesel margins, he urged the minister “for the love of Jesus” to reconsider his and the Davis administration’s position.
With gas station operators unable to remain profitable, and absorb ever-increasing costs and inflationary pressures via fixed margins that have not increased for more than 11 years, Mr Bastian said he and other dealers noticed that the Government has granted concessions to multiple foreign investors and the trade unions but is unwilling to do the same for Bahamian investors who “fuel the economy every day”.
Emphasising that he has “the utmost respect” for Mr Halkitis, and that his comments were not to be taken personally, he nevertheless argued that the minister’s Senate statement “tells Bahamian gas station operators throughout the Commonwealth of The Bahamas they they don’t care about us”.
And, while Mr Halkitis had urged the petroleum dealers to keep negotiating with the Government in a bid to reach an “amicable solution”, Mr Bastian said they should keep talking “for what” given that the administration’s position that it will not deal with the core or root problem - the price controlled fixed margins.
Asked about the petroleum dealers’ next move, given the position as outlined by the minister, Mr Bastian said: “I know where we’re going. We’re going to the church and will ask the church to pray for Michael Halkitis. Because obviously the minister of economic affairs, and I want you to quote me on the record, the minister of economic affairs does not love the gas station operators.
“I have to go to church and ask them to pray for Mr Halkitis. I have the utmost respect for Mr Halkitis, but he doesn’t understand the plight we face. We’re asking, and we want you to ask, Mr Halkitis to reconsider his stance and position on the petroleum retailers.”
Mr Bastian then suggested that he and the minister of economic affairs swap jobs for six months, after which the dealers and the Government could meet and agree a lasting solution once the latter gained a better insight into their difficulties. “Ask the Prime Minister to appoint me minister of economic affairs for six months, and I will sign over all my documents to him [Mr Halkitis] and he can run my business for six months,” the Association vice-president said.
“I give my station to Mr Halkitis for six months, and I take his job for six months and go into the minster of economic affairs position. Let’s swap.” Mr Bastian’s comments come after the Association and its members met last week in an “emergency meeting” to discuss what action they will take given that the industry’s fixed margins - at their current levels - mean they can no longer operate profitably.
“I tell Mr Halkitis: For the love of Jesus, reconsider his position. We are investors in this economy and we are hurting,” Mr Bastian told Tribune Business. “The Government has done stuff for the unions, the Government has done stuff for Royal Caribbean for its beach club on Paradise Island. They have done stuff for major resorts lie Albany, for Disney Cruise Line. How have they done things for everybody except for us Bahamians who fuel the economy every day?
“I go to work every day at 4.30am to 5am to make sure we provide an essential commodity for the Bahamian people. I’ve just now come home at 2pm. Tell Mr Halkitis: Have a heart. I tell Mr Halkitis: It’s not personal. He has his job to do, but please reconsider his position. That’s all we’re asking and saying.
“He’s telling me, and other dealers.. he’s telling us he wants us to fail and he doesn’t care about us. Mr Halkitis’ statements tell Bahamian gas station operators throughout the Commonwealth of The Bahamas that he doesn’t care about us and wants us to fail. How can he do that?” Mr Bastian asked.
“Please ask Mr Halkitis to reconsider his position, and then let’s meet and finalise a solution once and for all to allow us to keep feeding our families, keep people employed and help us to make our mark as business owners in the country. Please, Mr Halkitis, reconsider. I ask him the question: Does he love Bahamian business owners or not? He has my job for six months, I have his job for six months, and then he can let me know if his position’s the same.”
Mr Halkitis, in closing the Senate’s mid-year Budget debate was resolute in asserting that the Government will not approve any measures that “immediately increase” the price of gasoline such as the margin increase that retailers have been screaming for over the past year.
He argued that the Government was not “unsympathetic” to their situation, and urged the retailers to keep talking and negotiating with it. However, given that a margin increase is at the centre of the industry’s demands, it would appear that the sector and Davis administration are at an impasse or stalemate as gas station operators mull measures - such as operating hour and staff hour cuts, possibly even lay-offs - in a bid to slash costs and stay afloat.
Asked whether the Association and its members were willing to keep talking to the Government, Mr Bastian repeated “for what” three times given that it has taken the core issue - the industry’s margin structure and dealers’ need for an increase - seemingly off the table. He added that the sector is adamant that it wants the fixed margin structure changed to a percentage similar to “breadbasket items”, which would ensure its earnings rise in line with oil and gas price hikes.
“Why should we work every day and not be in business,” Mr Bastian asked. While Mr Halkitis last week said the Government has already taken “certain actions” to give the retailers some relief, Mr Bastian yesterday said: “I can’t explain that. He needs to explain that. Ask him to explain that to you. I can’t explain that.”
The last margin increase enjoyed by gas station operators occurred in 2011, some 12 years ago, under the last Ingraham administration, and operating costs and inflationary pressures will have increased substantially then.
That took gasoline margins from 44 cents per gallon to 54 cents, where it has remained ever since. Retailers had pushed for a 50 percent or 27 cents per gallon increase that would have taken this to 81 cents per gallon, but the Government has refused to budge despite the argument this is essential to keeping dealers in business.
The sector is arguing its main problem is that a fixed 54 cent margin is no longer sufficient to absorb ever-increasing costs, which include higher overdraft and card fees, plus rising utility and labour costs.
The minimum wage rise has hit gas stations hard, given that many persons were employed at this salary level. The resulting $50 per week, or 24 percent, increase has also required them to pay increased National Insurance Board (NIB) costs. And last year’s spike in gas and oil prices, while increasing dealer’s top-line sales, means higher turnover-based Business Licence fees even though profits have not changed due to the fixed margins.
NIB contribution rate increases and the up to 163 percent increase in Bahamas Power & Light’s (BPL) fuel charge also await, with many already struggling to cover the elevated Business Licence fees due by March 31. While Business Licence concessions may give gas station operators temporary relief, Mr Bastian said the industry is “tired of band aids; band aids fall off all the time.
“It’s all tied together,” he added. “If you go from a minimum wage of $210 a week to $260 per week, that’s a 24 percent increase, and National Insurance contributions also rise. Then BPL said they are going to increase. It’s all inter-related.
“Michael Halkitis is a trained economist. He should understand this. I have the utmost respect for Michael Halkitis. I’ve known him for 40 years, and know him to be a good, decent human being. He’s a friend, and I love him, but how could he do this to business owners?”
Mr Halkitis and the Government, though, have repeatedly stated that their priority is to further shield Bahamians from price hikes and inflationary pressures on essential commodities such as gasoline given the cost of living crisis impacting hundreds of Bahamian families.
However, it is the Government that earns the greatest economic benefits from the petroleum industry via the Public Treasury. Besides 10 percent VAT levied on every gallon of gasoline and diesel sold, it also receives a $1.15 ad valorem charge without incurring any of the costs faced by retailers and wholesalers.