The Tribune

By FAY SIMMONS

Tribune Business Reporter

jsimmons@tribunemedia.net

A Cabinet minister has confirmed the Government explored moving petroleum retailers from a fixed to percentage-based margin while revealing no proposal for a similar increase has come from wholesalers.

Michael Halkitis, minister of economic affairs, said long-running negotiations with the Bahamas Petroleum Retailers Association (BPRA) over the recently-increased gasoline and diesel margins also considered moving from a fixed to percentage-based system that would move in tandem with global oil price changes. The percentage would thus remain unchanged regardless of price.

The minister said this proposal had its “pluses and minuses”, but it was ultimately decided to stay with the fixed margin and grant the retailers an increase. Mr Halkitis explained that during two years of talks, the Davis administration was concerned about the impact any margin rise would have on motorists and explored many options to grant the retailers relief without having a big impact on pump prices.

“During that period, our view was, at that particular time, we did not want to have a situation where we were causing an increase in the price of gas at the pump. And so we were going through many, many possibilities and scenarios on how we would do it,” said Mr Halkitis.

“A part of it was to go to a percentage instead of a fixed margin. That has pluses and minuses, but we’re happy to be able to do the increase to bring them some relief. It appears as, if you know, prices have sort of stabilised at a lower level.

“There is an impact on the consumer, which you know we regret, but you know that that was unavoidable in those circumstances. But the prices are at a lower level going forward. I mean, we’re prepared to just continue any discussion as to how we can make the whole thing better.”

Mr Halkitis added that retailers deal with a lot of “pressures” involving the day-to-day cost of running their operations, and he is continuing discussions with them to find a system that benefits the industry and the public.

“They face a lot of pressures - from the cost of rent to the cost of utilities to other franchise fees, employment costs and stuff. And so we understand that, and we continue any discussion with them to see how we can come up with a better system that works for them and for the public,” said Mr Halkitis.

Sir Franklyn Wilson, FOCOL’s chairman, recently said that the increase in gas retailers’ margins was unfair to wholesalers - Esso, Rubis and Shell (FOCOL) - as they have not received an increase in two decades.

He voiced frustration over this given rising operating costs and inflation affect both sides of the industry, reiterating that wholesalers last saw a margin increase for diesel in 2002. Prime Minister Philip Davis KC, however, said the government has no plans to raise profit margins for gas wholesalers.

“At this time, we are tackling the structural issues as it relates to the cost of living,” said Mr Davis. “The issue with wholesalers has a different circumstance. We are looking at it. We are not looking at increasing. We try to find how we could decrease the cost of wholesaling in The Bahamas.”

Mr Halkitis said although he has seen reports of the wholesalers asking for an increase, nothing has been submitted to his office. He declined to speak further on their concerns, stating: “Prime Minister has already spoken to that. I’ve seen some stuff in the newspaper. I haven’t seen anything come across my desk as minister of economic affairs but, as I said, Prime Minister has already spoken to that.”