The Tribune

By FAY SIMMONS

Tribune Business Reporter

jsimmons@tribunemedia.net

The Government’s top finance official yesterday faced another ambush - this time from aggrieved petroleum retailers asserting the administration has “their two big foot on top of me” over a margin increase.

However Simon Wilson, the Ministry of Finance’s financial secretary, in his first public appearance since the well-publicised confrontation with a Nassau Guardian reporter, enjoyed a far more cordial encounter with gas station operators during the Rotary Club of West Nassau event where he was speaking as they sought to discover if their 30-month negotiations are any closer to resolution.

Bernard “Porky” Dorsett, owner of Porky’s Rubis Service Centre, said the drawn-out talks with the Government over their long-standing cries for a margin increase were undermining the ability of dealers to operate a profitable venture and stay in business.

Speaking to journalists yesterday, Mr Dorsett voiced his frustration over the long-running negotiations that seemingly have no end in sight as he tries to work out how to continue operating a business that has been in his family for 52 years.

He said: “I don’t think no government, I don’t care who they are, they shouldn’t be in my businesses. And right now they got their two big foot on top of me. That’s wrong. This ain’t no way to run no country. People have to be able to make a living and the Government shouldn’t tell you what you’re supposed to make.

“The fuel business in this country, I’ve been in it since 1969. I ran the station in Madeira Street and, in 1972, I opened the station in South Beach, Bamboo Town. My dad say we want to station out there so we went and built one. Here it is 52 years later. We still run it, but I’m trying to figure out how long we will be able to run it.”

Gas retailers have not received a margin increase since the last Ingraham administration granted one 13 years ago in 2011. Unlike virtually all other industries, which are able to increase prices as-needed to cover rising operating expenses, the Bahamian petroleum industry operates on price-controlled fixed margins that require government approval before they can be changed.

Dealers say that, especially following the post-COVID cost of living crisis, ever-rising expenses have effectively wiped out the 54 cent and 34 cent margins per gallon of gasoline and diesel sold, driving them into losses and placing some in a position where they frequently threaten to close their operations. The Government, though, has been reluctant to raise the margins for fear it will increase fuel bills for motorists.

Mr Dorsett said the 54 cents per gallon of gasoline margin is not enough to sustain a profitable operations. He pointed out that the Government collects more in VAT, per gallon of gasoline sold, than he does at the present fixed margin

With his gas station’s electricity bill ecxceeding $7,000 per month, Mr Dorsett said this - when combined with the increase in NIB contributions, minimum wage and the Department of Inland Revenue requiring businesses with a $5m turnover or above to submit audited finances, his operational costs are greater than his profit.

“Since 2011, they’ve been trying to have me operate off 54 cents a gallon,” he explained. “Right now the VAT the Government collects on the fuel that I sell is more money than I make. The VAT on every gallon of fuel is more money than the money I’m supposed to operate my business - I’m supposed to run my business - on. Something is wrong with that.

“They blame and tell the public that we the culprits, we screwing them. I don’t know how to get to that decision, but that’s the lie they continue to tell. I’ve got taxes to pay, I got staff to pay, insurance to pay, stupid light bill to pay, $,7,000 plus a month. What I ga pay it with?...

“The other day I deliver $8,500 worth of fuel to a project we’re doing at Clifton Pier. You know what my profit was on that? $355. I might as well go sell peanuts. The peanut boy could put it a dollar on his own.”

Mr Dorsett argued that since fuel is considered an essential item, retailers should be able to charge the same mark-up as breadbasket items. He said: “If it’s $5.60, I’m paying more than $5 a gallon for it. So what else do you expect? The cost is pushing my items up, and the higher gas go up, the less money I make because I’m working on a fixed margin.

“If I make 54 cents on $3, I make 54 cents on $6. I’m spending twice the money to make the same money. I’m in business and the Government needs to know that. Bread basket items are 22.5 percent or 23 percent. Move my gasoline margin to 23 percent. Right now, it’s about 8 percent. How are we supposed to run this business?” Percentage-based, as opposed to fixed, margins are what dealers are seeking.

Mr Dorsett said he is concerned about the future of his family business, and added that supply and demand should determine his prices, not the Government. He added: “Day after day, year after year, from 2011 to now, 13 years, something has to happen. We can’t run a business like that. I have children and grandchildren in this business. What’s their future?

“I don’t think we should be dependent on the Government. I don’t think no government should be telling me what I should make in my business. Supply and demand. That’s all it is, simple. No government should tell me what I should be making in my business. If the price too high then the customers don’t come. But I have to make a living. “

As for the new requirement to supply audited financial statements, Mr Dorsett said every auditor he approached charged at least $20,000, which is more than he can pay. He argued that gas retailers have a turnover that exceeds $5m because the product they import is expensive but, due to the margins, their profit is low.

He said: “They tell me they want to audit my account. They want to audit my business because we turnover $5m. The fact that we turn over $5m is because the product we buy costs almost $5 a gallon. I make 54 cents on a gallon of fuel.”

Mr Wilson yesterday said the Davis administration has made “considerable progress” on the negotiations with Bahamian petroleum retailers but explained that “it is not my decision” as to whether the margins are increased, by how much and what method, and the timing of any rise.

He said: “We’ve made considerable progress. It is not my decision, but we’ve made considerable progress and certainly, from my perspective, I think we’re closer to having this concluded.” 

When pressed for a timeline for when talks will be concluded, he maintained this position. “It is not my decision, but we’ve made considerable progress,” said Mr Wilson. The financial secretary, as a public official, can only advise and recommend on such issues. The margin decision has to be taken at the policymaker level, meaning the Cabinet, or a Cabinet committee/sub-committee.

Mr Dorsett, though, asserted that it is “only a game they play”, and the Government can grant the margin increase “any day they want”. He added that the last Ingraham administration promised a further five cent margin increase and it “ain’t happen yet”.

He said: “They been making progress for three years; that’s only a game they play. They can do it any day they want. They could do anything they want do. They can wake up and tell us anything and they expect us to do it.

“Hubert Ingraham in 2011 gave us ten cents on a gallon of fuel. We was making 44 cents. He gave us 10 cents and promise five cents later. That five cents ain’t come yet. That was 2011, it ain’t happen yet.”