The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

Hard-pressed Bahamian energy consumers will not reap the benefits from a 25 per cent drop in global oil prices because BEC’s fuel supplier has it “by the balls” over its $130 million debt.

Leslie Miller, the Bahamas Electricity Corporation’s (BEC) executive chairman, said yesterday that despite the steep drop in global oil prices since June, the energy monopoly has seen no decrease in its fuel bill “to talk about”.

He suggested that the Corporation’s massive fuel debt to Shell Western was part of the reason why.

Oil prices have hit their lowest levels in years since June, driven largely by what experts have deemed a supply glut. US prices have fallen 25 per cent to around $80 a barrel.

But Mr Miller said BEC, which passes its fuel costs on to businesses and households via a ‘variable rate’ to its customers in their bills, had not seen any benefit from lower global oil prices.

He said: “BEC has seen no decrease, nothing to talk about. It’s just one rip-off on the backs of the Bahamian people.

“Because Shell West has us by the little ones, because we owe them so much money, they could play games with us because they have the upper hand.

“We haven’t seen it, no. Right now our current balance to Shell Western is about $130 million.”

BEC’s fuel charge, which accounts for as much as 60 per cent of consumer light bills, is effectively a ‘pass through’ charge or ‘cost recovery’ mechanism off which the Corporation, in theory, makes no profit.

However, several observers have suggested over the years that BEC includes other costs in its ‘fuel charge’, and this is used to camouflage all sorts of inefficiencies and unexplained costs.

Tribune Business was pointed towards the substantial drop in global oil prices by a concerned Bahamas-based businessman, who questioned why the decrease had yet to be reflected in local energy and gasoline prices.

The businessman pointed out, like former Bahamas Chamber of Commerce and Employers Confederation (BCCEC) chairman, Robert Myers, that reduced energy costs were the best possible offset to Value-Added Tax’s (VAT) likely impact in the New Year.

Referring to the 25 per cent decline in local energy prices since June, they said: “I have yet to see this reflected in local gasoline prices.

“The drop in fuel prices is the only silver lining in this bleak Bahamian economic environment, as it puts more discretionary dollars in the pockets of hard-pressed consumers and may mitigate the VAT increase.

“Why isn’t anyone talking about it? And what is the lead time between changes in the global price and local prices? Just curious.....”

Mr Miller, meanwhile, returned to one of his favourite historical targets by blasting the Bahamian petroleum industry over the cost of fuel for motorists at the pumps.

Fuel prices now stand at $5.06 between the three major distributors, down from a $5.30-$5.40 average. Mr Miller, though, said this compared to roughly $3 at the pumps in Florida.

Suggesting the Bahamian price was “too high”, he added: “The price of oils has gone down over the last two months around the world by some $0.40. Why is it in the Bahamas that there has been no decrease.

“When I was Minister of Trade and Industry, they used to make up their own invoice based in the days when oil prices were highest. It’s amazing that they are allowed to do this foolishness.

“Prices must come down in the Bahamas. The Bahamian people must demand it. Those prices make no sense. The Government should demand that their prices decrease immediately.

“Oil prices have plummeted. Six weeks ago oil was about $127 a barrel, and now it’s down to as low as $77 a barrel, and yet you have seen no decrease at the pumps. They just want to make a profit.”

The Government currently receives $1.06 per gallon plus a 7 per cent Stamp tax on imported fuel. Petroleum retailers and wholesalers also operate on fixed margins.

In October 2011, the Ingraham administration increased gasoline and diesel margins by $0.10 and $0.15 per gallon, respectively. Gas retail margins had been previously fixed at $0.44 per gallon and $0.19 per gallon for diesel.

The margin on gasoline now stands at $0.54 per gallon for retailers, and $0.33 for wholesalers. Diesel is $0.33 for retailers and $0.18 for wholesalers.