The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Petroleum retailers yesterday disclosed there has been “movement” on a proposed “two-step” solution to their margin woes as they warned: “We cannot wait until the Budget debate is over.”

Raymond Jones, the Bahamas Petroleum Retailers Association’s (BPRA) president, told Tribune Business he planned to reach out to the Government as early as today to try and obtain an implementation “timeline” following both sides’ last meeting two weeks ago.

While encouraged, and believing the more than two-year push for a margin increase may have some momentum, he reiterated that the industry’s concerns must be resolved as “a matter of urgency” given that ever-increasing costs over the past 13 years have escalated to the point where dealers’ price-controlled fixed margins have effectively been wiped out.

Asserting that the margin increase being sought is “not even close” to $1 per gallon, Mr Jones said what is proposed will allow gas station operators to “breathe” via a “short bump to cover costs” and they will then compete for greater volume through attracting more motorists to their respective businesses.

“We’ve had some movement,” he disclosed of the industry’s negotiations. “We met with the Government. We re-emphasised the need to move forward with the proposal. We’ve given them the proposal. They said they were accepting of its recommendations, and it was discussed doing it in a two-step approach. We’re waiting to gear back from them as to what is the status.

“I’m hoping tomorrow [today] to see if we can get back to the Government and see if they can give us a timeline. I thin the time for negotiations has been completely exhausted. We’ve proposed and negotiated with the Government on what is reasonable to sustain the livelihoods of petroleum retailers in the country. I think they accept that.

“They’ve looked at all the numbers. We just have to get to implementation of what in essence has been agreed. I think the Prime Minister is showing he has the fortitude to make tough decisions to get it done. Nobody wants to see increased costs, but to the extent increases have eroded our livelihoods and profitability, we have a right to make and return a small profit to invest in and stay in business.”

Petroleum retailers have remained steadfast in arguing that increases to the price-controlled margins of 54 cents per gallon of gasoline, and 34 cents per gallon of diesel, are “desperately needed” because it is impossible for them to cover costs that have escalated significantly since those levels were implemented more than a decade ago. It has forced many into constant losses, and put their business survival in danger.

Mr Jones yesterday pointed out that the imminent National Insurance Board (NIB) contribution rate increase of 1.5 percent, set to be evenly split between employer and employee, represents a further cost increase that gas station operators and the wider business community will have to bear when it takes effect on July 1. However, other industries do not operate on fixed margins set by the Government.

As a result, they can offset expense rises via price increases to the consumer - something that cannot be done with fuel. Mr Jones said the Association last met with the Government two weeks ago, although he declined to name the ministers involved. One is likely to have been Michael Halkitis, minister of economic affairs, and possibly even Prime Minister Philip Davis KC himself.

“We met with the relevant ministers who have responsibility and oversight for this industry, and can approve the measures that are necessary,” Mr Jones said. “We must have an increase put in as a matter of urgency. We need to move forward as a matter of urgency to implement margin adjustments.

“Our members and entrepreneurs require these adjustments. We cannot wait until the Budget debate is over. It needs to be agreed and put in now.” The Association president added that he needed to “check the details” of what the industry is proposing, but added: “We’re looking for a reasonable margin that’s probably going to be 10-15 percent of what you’re paying...

“It’s not even $1 a gallon [increase]. It’s not even close, but it’s enough to allow us to breathe and give us a chance of making money provided we execute and attract customers to our stations. We have to build volume. It’s not going to work for everyone. It’s not a substitute for doing your job.

“It’s a few cents more per gallon, but we have to work and encourage those customers to come and buy gas from us. We have a responsibility to deliver excellent customer service. All we want is a short bump to cover costs, and as the economy grows we will make more money from volume as people drive more.”

The Government’s public position has always been against granting petroleum retailers a margin increase for fear it will increase costs at the pump for consumers. Yet in 2022 it sought to give dealers “breathing room” by providing the industry with tax rebates totalling $6m - $5.5m in cash and $500,000 as offsets to some of the taxes owing by operators. The Budget debate closes at the end of June.