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Marinas set to join Parliament fuel protest on ‘viability threat’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian marinas yesterday said they will join tomorrow’s Parliament protest by petroleum retailers as the fuel industry’s price-controlled model is threatening “the viability of our sector”.

Peter Maury, the Association of Bahamas Marinas (ABM) president, confirmed to Tribune Business the group “will be represented” on Bay Street as it revealed that government taxes and credit card fees consume “90 percent and sometimes more” of the revenues generated by selling diesel fuel to local and foreign boaters.

Disclosing that the fuel industry’s inflexible pricing structure has resulted in Bahamian marinas suffering similar problems to land-based gas stations, with the 34 cents per gallon diesel margin decimated and often eliminated by rising operating expenses, Mr Maury voiced concern that the authorities seem not to realise “you cannot run a business at a negative loss”.

The ABM, in a statement yesterday, said it sympathised with both the Bahamas Petroleum Retailers Association’s (BPRA) objectives and plight of its gas station operator members. And it gave its backing for the campaign “to achieve viable margins”.

“Our members attract thousands of boaters to The Bahamas annually who consume substantial quantities of petroleum products which our members supply. In doing so they are burdened by VAT on these sales in addition to taxes on fuel, taxes on bunkering and exchange fees on the credit card transactions that comprise 90 percent of sales,” the Association added.

“The cost of supplying this vitally important commodity is disproportionally high for businesses that bear considerable overheads in management and staff costs, utilities, real property taxes, rent and debt service, where applicable.

“It also makes the prospect of visiting The Bahamas increasingly expensive for boaters already beset by spiralling insurance costs. When all of this is accounted for, the fuel service business structure is proving to be unsustainable and a threat to the viability of our sector,” the ABM continued.

“We urge the Government to consider relaxing the tax imposed on petroleum products, a move that will have a stimulative effect on the economy in general and on our sector in particular.” Mr Maury, when contacted by Tribune Business yesterday, said marinas have something in common with petroleum dealers as both are retailers of gasoline products to the consuming public.

Confirming that Family Island marinas, where fuel prices are higher than in Nassau because of the extra shipping costs, have been receiving “complaints” from boaters about the cost, the ABM chief asserted: “We pay taxes on the fuel, we pay taxes on the delivery, we have to pay the taxes on the bunkering and pay credit card fees.

“For fuel, we have a lot of US-based or foreign-based boats, so we pay the exchange conversion fees.” Asked to confirm whether these taxes and costs wipe out 90 percent of marinas’ fuel sale margins, Mr Maury replied: “Pretty much. It’s actually more than that in some cases.

“It’s not that we’re treated worse than the [petroleum] retailers. We’re all just getting killed. They’re putting too many taxes on it. The marinas don’t have a convenience store. The convenience store can offset some of it. The gas stations offset some of it with other items, but we just take a straight loss.”

Mr Maury said marinas are “supposed to get a discounted rate” from the banks on credit and debit card fuel sales, but he argued that this is “not low enough” in the face of high diesel prices and market volatility.

And, like the land-based gas stations, they find themselves having to pay more upfront to acquire their fuel supplies from wholesalers - incurring higher bank fees in the process - yet end up earning the same as before because of the fixed margins unless volumes increase. And, with boating numbers having been impacted by other tax increases, volumes have not been growing.

“With the increase in electricity costs and everything else, it’s just becoming not feasible,” the ABM chief said of fuel sales. “Fuel docks are supposed to get a discounted merchant rate on those sales but it’s not low enough because fuel has gone up. 

“It’s not a percentage margin we get; it’s 34 cents. It’s fine if we’re selling fuel at $2 per gallon, but when you’re selling it at $5 or $6, your merchant card expenses, which are a percentage, eat right into that margin. And fuel docks, in most cases, you don’t get any kind of extended credit terms. A lot of docks have to pay right away.”

Mr Maury also explained that marinas are plunged into a worsening loss if the price controls governing fuel prices are suddenly lowered by the Government - thus leaving fuel docks with inventories acquired at higher prices that now have to be disposed of at a reduced cost.

“Fuel just went down 35 cents,” he said. “If you bought the day before, and you never know when the price is going to change, if you’re caught with expensive fuel in your tank that you bought at a higher price it eats away at your margins when you have to sell at the now-lower price. From whatever’s left you have to pay credit card fees, fuel attendants and everything else.

“A lot of people look at the price of fuel, but it ain’t the retailers - the marina fuel docks and the gas stations - making the money. The marinas are the same as the gas stations. That’s all we are - a gas station. With the increased prices and sometimes the other issues we are faced with, it just eats into it.

“For us, it certainly makes it difficult to do business,” Mr Maury added. “We either go to self-service or get better credit card fees. You cannot run a business at a negative loss. Nobody is taking this into account. The economic model is faulty. When they change price controls they aren’t thinking about the impact on us.”

Echoing the ABM’s call for the Government to reduce fuel-related taxation to ease the burden on all, a move that the Davis administration has consistently ruled out, the ABM president said these woes - combined with ever-escalating operating costs and reduced visiting boater numbers - could force some marinas to “scale back” and reduce staff or working hours.

“Add the loss of income, revenue from the boaters that aren’t coming here because of other taxes put on our industry and it’s unsustainable. People are going to shut down or scale back,” Mr Maury warned Tribune Business. “For me, I’m going to make sure the marina survives and do the physical work myself.

“They’re taxing everyone to death. What do we do? Nobody seems to be listening to the businesses. The Government, for some reason, has a position where they think we’re all making stuff up. We’ve said before to come to the marinas but no one has. I’ve sat in meetings with government ministers where we’ve said to come sit with us.”

 

Comments

birdiestrachan 3 months ago

is Mr Peter Maury prepared to give food to the school children , provide free medical care and hospitalization or fix the Roads, or provide food stamps , ?.?l The Government has huge burdens to bear where will the money come From , never mind they travel too much that is FNM foolish talk

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