Continuing his push for the Bahamas to join the Petrocaribe oil deal, Minister of Agriculture, Fisheries and Marine Resources Leslie Miller on Monday attacked “criminal” oil companies and warned that consumers would likely continue to be burdened with high energy costs in the absence of such an agreement.
The oil alliance with Venezuela, launched a year ago, allows Caribbean countries that have signed on to purchase oil on conditions of preferential payment.
Under the plan, nations can purchase oil at market value, but are only required to pay a certain amount up front. The remainder can be paid through a 25-year financing agreement on 1 percent interest.
Minister Miller, who no longer has energy under his portfolio (with the exception of liquefied natural gas), told members of the House of Assembly that motorists would be able to save $1,200 per year under Petrocaribe.
The minister added that the Bahamian people could have saved anywhere between 25 cents and $1 per gallon of gasoline and diesel, which could have translated into savings for the country of up to $85 million per year.
He said that in 2005, expenditure on petroleum products surpassed the half billion-dollar mark for the first time in the countryﾒs history, when expenditure reached $525.2 million. This represented an increase of $159.8 million or 44 percent over 2004.
“Many persons have said that Petrocaribe was not going to save money,” said Minister Miller, who was contributing to debate on the 2006-2007 budget. “However, everyone should know that buying directly from the producer always creates savings as you cut out the middle man.”
The minister again produced figures that he said showed that the margins oil companies are receiving are significantly higher than many other countries in the region, including in places like Barbados with economies similar to the Bahamas.
He said oil companies are getting significant benefits to the detriment of everyday Bahamians.
“The variance of the margins in these countries compared to those in the Bahamas continues to be of grave concern to me personally, not as the minister, because I am not the minister responsible,” Minister Miller said, “but as a Bahamian consumer, and I am deeply concerned about the burden placed on the backs of Bahamians in this country by the three oil companies.”
He pointed out that in Barbados, the wholesaler and retailers collectively get 49 cents out of the sale of each gallon of gasoline. That figures stands at 34 cents in Antigua; 37 cents in Jamaica; 19 cents in Trinidad and Tobago and 77 cents in the Bahamas, according to the minister.
“Tell me how thatﾒs possible?” Minister Miller asked. “Seventy-seven cents you and I pay for a gallon of gasﾅStraight across the board weﾒve been getting ripped off by these oil companies and we will continue to get ripped off as long as we sit back and do nothing.”
He said the high margins were created by the FNM, which granted increases of 35 cents of the existing 77 cents.
“I often wonder why no margin requests were received during the last four years while this PLP Administration was in office and this minister was responsible for petroleum, whereas three increases were granted in the first term of the FNM with another in early 2002 just before they left office,” Minister Miller said.
Pointing to electricity costs, he said over the past three years (2002-2005) BECﾒs fuel cost rose by $81.9 million or 99 percent, while there was only a very modest increase in the number of units generated.
He told House members that BECﾒs fuel cost for fiscal year 2005-2006 was $164.4 million, compared to $82.5 million in fiscal year 2002/2003.
“The impact of this was an increase in the fuel surcharge which all of us had to pay,” Minister Miller said. “Yes, Mr. Speaker, I pay my electricity bill at my home so I feel the pain just like all other consumers.”
He announced that the average cost to consumers for fuel surcharge last year was $178.93 for low-income homes; $894.63 for middle-income homes; and $1,789.25 for high-income homes.
Businesses also felt the impact, according to the minister.
Hotel owners spent an average of $244,600 on fuel surcharge for 50 to 100 rooms; an average of $377,115 for 200 to 300 rooms; and an average of $1,722,225 for between 500 and 1,000 rooms.
“Yes, Mr. Speaker, this is for fuel surcharge only, and these amounts had to be paid along with the regular electricity charge that normally applies,” Minister Miller said.
He added that in October 2004, BEC recovered $4.9 million from consumers in fuel surcharge. By September 2004 this amount had increased to $12 million.
“And the naysayers are wondering why I had so much interest in Petrocaribe,” Minister Miller said. “I wanted to cut that bill down…We were trying to save the Bahamian people what we saw was going to come, but itﾒs now here.”
He said that based on proposals the government received, BEC could have saved approximately $10 million per annum, while having access to credit facilities of up to 40 percent of its annual purchases at 1 percent interest instead of the present interest rates of around six percent per annum.
This would have meant further savings of approximately $5 million over the grace period, he said.
By: Candia Dames, The Bahama Journal
