The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Virtually all gas station operators are aged over 50 because the industry is viewed as a “dead end” business where entrepreneurs cannot earn a profit, their Association president is asserting.

Raymond Jones, the Bahamas Petroleum Retailers Association’s (BPRA) head, told Tribune Business that the sector is seen as “not a business to get into” - despite being an essential service - because its inflexible, price-controlled fixed margins have been “decimated by rising costs” to the point where existing dealers are operating at a loss.

Speaking after this newspaper revealed that the Association and its members plan to protest the Government’s failure to grant them a long sought-after margin increase outside Parliament when it resumes on Wednesday, he added that the 25 cent per gallon of gasoline rise they thought had been agreed is “less than what someone spends buying a beer or can of soda”.

However, Keishla Adderley, the Prime Minister’s press secretary, yesterday said the Government’s long-standing position that it does not want to burden motorists with any fuel pump price increase is unchanged although it understands the dealers’ concerns.

“We understand there are grievances. This is an ongoing matter,” she told the weekly media briefing by the Prime Minster’s Office. “Obviously the gas retailers are seeking increases. I can tell you that talks have continued with the office, in particular the Ministry of Finance, to come up with a formula.

“Obviously the Government is concerned about the health of those businesses but it’s equally concerned about placing any undue burden on consumers. The focus continues to be on coming to a consensus, creating a formula that will be mutually beneficial and not over burden either party.

“It has been tough. I would be the first to admit that. The discussions are continuing. I think what has led to it being so hard to move on this is the focus on making sure both consumers and retailers are satisfied. I wouldn’t want to put a timeline on it, but it’s something we do want to come to a resolution on for obvious reasons.”

Mr Jones, though, reiterated that the industry’s present fixed-margin financial model, with dealer mark-ups set at 54 cents per gallon of gasoline and 34 cents for diesel, makes it almost impossible to attract new entrants into the business as they cannot see any way to make money and earn a living.

“The retailers, 99 percent of them are over 50,” he told Tribune Business. “No new people are going into it because it’s a dead end thing where you cannot make money. It’s not a business to get into unless you’re a wholesaler because the margins have been decimated by rising cost we have no control over.

“We really need the Government to step up to the plate and give us the margin adjustment we thought had been agreed back in July. We’re well beyond the prescribed sell-by date. Vacation has come and gone, the House is opening up and here we are still waiting for a margin increase adjustment and, before you know it, it will be Christmas, no money in the kitty and retailers will be closed.”

Mr Jones said the purpose of next Wednesday’s protest will be to show “we’re still here, we’re not going anywhere”. He added: “Let’s not get drastic, but we’re all feeling the pain.” The Association chief said dealers may reduce staffing levels or operating hours “not because we don’t want to be in business, but because we cannot afford” to be.

“Twenty-five cents is not going to break the bank for our people,” he argued. “Twenty-five cents a gallon is less than what someone spends buying a beer or can of soda. At the end of the day it’s not a hard decision to make. We need to help those people. They’ve done it for the taxi drivers, the pharmacists and everyone else.”

The Government previously gave the petroleum retailers a collective $6m in financial assistance in 2022 in a bid to ease their plight, but Mr Jones said much of this sum was largely deducted to pay VAT and Business Licence fees owed by the sector. “Some people got a few dollars, nothing significant,” he added, while pointing out that the same problem of fixed margins still remains.

The Association chief argued that there was sufficient competition in the sector to allow for the complete elimination of the price-controlled fixed margins. “The public can only bear so much. We ain’t stupid,” Mr Jones said, adding that removing the fixed margins would produce mark-ups that “aren’t going to be much more than what we’re asking for”.

“We don’t have monopolies. There are three different brands on the island,” he pointed out. “In the rest of The Bahamas, the same thing. We cannot charge 50 cents more for gas than the other guy because drivers will all go to him because it’s cheaper. Look at the beverage industry. If someone gives away three drinks for $5, they’re going to leave your store and go to that....

“We discussed with the Government possibly changing the margin to a percentage of the landed costs, which would mean your margin rises and falls according to the landed cost of fuel. We’d love to get to that point, but we’ve not been able to get them to implement a fixed margin adjustment.

“What are the chances of getting them to agree to a percentage margin? That will be another three years before we can get them to agree to that. We hold out hope that the Government will do what they agreed to do and make a decision in the best interests of Bahamian entrepreneurs so that they can survive,” Mr Jones continued.

“The Government is doing a lot but this is something they have failed to address. We’re coming out to show the public we’re still here and to get a couple of cents to maintain properties, keep our staff employed and pay our bills. We don’t have any leeway with the wholesalers. It’s pay as you get delivery.”

Asked about the financial status of Association members, Mr Jones said: “Most retailers are in the condition where they are struggling to pay power bills and operating costs, but have too much invested to throw the keys back and say: ‘I don’t want it any more’.

“Retailers don’t want to shut the country down as everyone is hurt. We’re saying to government you’ve been in for three years and want to be fair to all businesses in the country. We are in a price-controlled environment that you, the Government, have control over.

“We’ve provided to them all the facts, historical operating data. We’re not asking for a dollar or anything unreasonable. We’re saying 2 cents a gallon: That’s it. They think it’s too much to put on the public but minimum wage has gone up, NIB has gone up, BPL power bills are up again but we are stuck with fixed margins. We cannot survive that way. The things most concerning to the public are not covered by price controls except gas.”