The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

GAS station operators yesterday said “we cannot wait longer than a week” for the Prime Minister to respond to cries to address their plight, with one asserting: “The silence is too great.”

Raymond Jones, the Bahamas Petroleum Retailers Association’s (BPRA) president, told Tribune Business to “stay tuned” when asked what action petroleum dealers may take if there was no reply to their request for an “urgent meeting” with Philip Davis KC to tackle the “dire straits” caused by fixed gasoline margins that have remained unchanged for 12 years.

The Association, in its February 26, 2024, letter to the Prime Minister, added that increases to the 54 cents per gallon of gasoline, and 34 cents per gallon of diesel margins are “so desperately needed” because it is impossible for them to cover costs that have escalated significantly over the past decade-plus.

“Prime Minister, on behalf of our members, I wish to request an urgent meeting with you to discuss the dire straits that petroleum retailers find themselves. With your leadership, we must come to a final resolution on the margin adjustment,” Mr Jones wrote for the Association.

“Over the past two years, several proposals have been discussed and, in April 2023, a proposal from the Government was accepted by our association but to date not yet implemented by the Government. Prime Minister, while we all admire the great work that you and your government are doing, petroleum retailers need immediate change to the fuel margin.

“Many petroleum retailers are at the point of closing their doors as costs continue to mount against the current margin. These businesses affect the livelihoods of countless Bahamian entrepreneurs and their employees, and a closure of any of these sites has a ripple effect in our economy,” he continued.

“Just this past December 202, the new requirement by [the Department of] Inland Revenue for an external audit of businesses with sales over $5m will impact nearly all stations and is simply more added cost which stations cannot afford.”

Gas stations are among the high volume/low margin businesses that are disproportionately impacted by such impositions, with the audit further adding to costs that fixed, price-controlled gasoline margins simply cannot absorb, thus potentially adding to dealers’ losses.

“We are Bahamian entrepreneurs and need immediate relief via a margin adjustment which is established by the Government. It has been more than a decade since a margin adjustment was made, clearly not keeping pace with the rising costs,” Mr Jones added in his letter to Mr Davis.

“Prime Minister, we were told over and repeatedly ‘wait for the price to go down, then the Government will take action’. Last year, 2023, and in 2022, between July and September, a significant price decrease [in global oil costs] was realised, yet despite our appeals for a mere $25 cents per gallon [increase] no action was taken. We are respectfully calling on you to take decisive action with this matter.”

Mr Jones yesterday told Tribune Business that reduced operating hours, with dealers no longer staying open 24/7 in a bid to cut costs, was one possible response if a margin increase - either fixed or a percentage-based mechanism - was not forthcoming.

Speaking after dealers yesterday held an “emergency meeting” with the Government yet to respond to their letter, Mr Jones said the Association and its members need to understand what help the Government plans to provide and when so they can budget accordingly for their businesses.

“At the end of the day, the silence is too great. Stay tuned,” Mr Jones told this newspaper. “It’s likely that at some point you will see dealers reduce their hours or do something else. We don’t want to inconvenience the motoring public, but for us to stay in business these are the things we have to do. It’s a double-edged sword because it impacts the public and impacts us.

“After doing what we can to minimise operating costs we need margins that give us cash flow to stay in business.” Asked how long the Association can wait for a reply from the Prime Minister and the Government, Mr Jones added that rising global oil prices and the impending summer months meant retailers needed quick resolution to negotiations that have dragged on for almost two years.

“I don’t think we can wait longer than a week,” he told Tribune Business. “We’re already in March. It’s taken too long. It’s been 12 years since the last increase. We’ve given some suggestions. They made a proposal to us, which we accepted, and then we thought the deal was done. Nothing happened.

“Subsequent to that, the minister [Michael Halkitis] said there would be no increase, which was a shocker because they’d proposed a new mechanism which we’d accepted. It can be done as a percentage of the landed cost.

“We just want a margin that’s reasonable for us to survive to be put in place. The current one is not tenable, won’t work and we won’t survive with it. Whatever means they’re comfortable with, we can agree with that and move on. Too much time has been spent on this.”

Mr Halkitis did not respond to Tribune Business calls and messages seeking comment before press time last night. Global oil prices declined slightly yesterday with the West Texas Intermediate and Brent Crude per barrel prices standing at $78.50 and $82.67 last night.

However, the Association yesterday broke down the present $5.48 per gallon cost of gasoline to show that $1.32 or 24.04 percent - almost one-quarter - of this figure goes to the Government via its ad valorem tax. Dealers and wholesalers, respectively, receive 9.86 percent and 6.21 percent with their 54 cents and 34 cent margins, with VAT adding another 50 cents once the $2.78 landed cost is factored in.

“We can expect to see $6 or more at some point I venture to say,” Mr Jones predicted of Bahamian gas prices this summer. “We are struggling and need some relief. We need to be able to pass a few pennies on to the public, which they won’t mind.

“The majority of dealers are struggling and feeling the pinch. Some of them are considering closing down. A lot of them want to throw the keys back in and forget it, but they have committed their lives to this industry. That’s the situation.”