Trade and Industry Minister Leslie Miller announced on Wednesday that the government plans to soon slash the margins on gasoline to drive the prices down.
“The whole system has to change,” said Minister Miller, who was a guest on the Love 97 programme, “Issues of The Day”, with Jeff Lloyd.
“[The proposal from the fuel usage committee] calls for three ingredients: the Government of The Bahamas lowering its duty rate from $1.06 to 90 cents [per gallon]; that we cut the margins on the imports from 33 cents to 15 cents-[and] that we also cut the margins for the retailers from 44 cents to perhaps 30 cents.”
By driving down the margins, Minister Miller said gasoline – which is now in the $4 per gallon range at most New Providence stations – would be significantly cheaper.
The government also gets seven and a half percent stamp tax on each shipment of fuel. The committee is reportedly also suggesting that that be lowered.
“The retailers are telling us, ‘Listen, we would like to have self service’ because many persons they say when the guy goes out there and serves them the gas they pull off from the gas stations and do not pay,” Minister Miller said.
“They want to go to self service instead of full service. So there’s a whole basket of proposals that we’re looking at to ease the burden off the back of the Bahamian people and I agree that in this instance the government probably should take the lead.”
Minister Miller also used the opportunity to again point to the financial benefits that would come from approving a liquefied natural gas [LNG] project for The Bahamas.
“My view was that if and when the Government of The Bahamas approves an LNG terminal in The Bahamas some of the income that would be derived from that terminal should be able to offset the duty that we charge on fuel to enable the Government of The Bahamas to assist the Bahamian people in lowering the price of fuel,” he said.
“The first year of operation of an LNG terminal, we’re looking at a minimum of $22 million base income to the Government of The Bahamas. So if we take $10 million of those funds and say, listen here’s additional money that the government is not receiving now that [it’s] getting [it would be a benefit].
“Use these funds to lower the duty on the fuel. Many countries do that by the way. You take from one source that you didn’t have before and you assist the Bahamian people. If a re-gasification terminal were on our shore now operating for 2004/2005, the windfall to the people of The Bahamas would have been in excess of $67 million.”
Minister Miller said the oil companies continue to take advantage of retailers who are being made to pay monthly rent in some instances of $20,000 every month.
He said this is why Independent Member of Parliament Pierre Dupuch, a former Minister of consumer affairs who co-chairs the fuel usage committee, is against the government taking any drastic measures against the retailers.
“I agree with what the retailers are saying,” Minister Miller said. “It is grossly unfair that Shell, for example, goes and gives you a gas station with food, which again should not have been allowed. The food stores are complaining that these guys are cutting into their sales and it is true.
“[Shell says] ‘out of your gross sales-I get 11 percent. Forget pilferage. They steal from you, tough. That’s your business’.
“Now, we met with some of the major retailers and it’s amazing. Some of the retailers will do 40,000 gallons a month. Some go up to 140,000 per month, but they’re telling us in the committee that they make more money selling food.”
He said that the Shell oil company is getting 11 percent on food sales at the individual stations; Esso is getting 8 percent and Texaco is getting 6 percent.
“We’re asking them if you want to continue to be in the food business-what we’re saying is that we would wish to see five percent across the board,” the Minister said.
He also claimed that the rent that retailers are paying oil companies in The Bahamas is approximately 30 percent to 50 percent higher than what is paid anywhere else in the Caribbean.
Minister Miller said the government expects resistance from the oil companies in putting a fair system in place.
“They’re not going to sit back [and allow it to change],” he said.
“It’s just like with Petrocaribe. Why would they ever go along with Petrocaribe when it’s going to cut into their profit margins? Do you think Shell is going to say, ‘Petrocaribe is a good idea; implement it’? That’s not going to happen in this lifetime.”
Minister Miller is pushing the Petrocaribe initiative. Under the plan, Venezuela has agreed to provide cheaper fuel and fuel-related products to countries in the region. But the Government of The Bahamas has not yet made a decision on the matter.
By: Candia Dames, The Bahama Journal
