Now that a new year has rolled in with a higher minimum wage and looming increases in electricity costs and business licenses fees, petroleum retailers are again pressing their demands for the government to urgently address their concerns about the existing margins to avoid businesses from going under and others from implementing layoffs to stay afloat.
“There’s no more milk in this cow,” warned Vasco Bastian, vice president of the Bahamas Petroleum Retailers Association, who said yesterday the onus is on the prime minister to act.
The retailers are asking the government to change the profit model from the existing fixed margins to a fully percentage-based model, which would allow more flexibility when the price of oil fluctuates.
Bastian said such a model would ensure
sustainability for petroleum retailers, whose budgets are stretched beyond belief.
“Remember now, whenever the price of oil or gas goes up, the government makes more money, not us,” he said.
“The government of The Bahamas is the one who makes all the money from gas stations in New Providence and when it goes up, they make more. When it’s stable, they [make money]. They make the bulk. No matter how it swings, left or right, the government makes all the money.”
Retailers earn 54 cents on a gallon of gasoline.
When a gallon of gas was $6.16 at the gas station, the gas station operators earned 54 cents and the petroleum wholesalers earned 34 cents.
The landed cost of the gas before value-added tax was $3.56 and $1.72 went to the government in duties and taxes.
Bastian said the matter is not political but the government needs to act as there has been a lot of talking on the issue.
“One thing I don’t want to do is make it political,” he stressed.
“I represent people from all political persuasions … in my capacity as vice president of Bahamas Petroleum Retailers Association. We’re not a political entity.
“We are Bahamian investors in the economy of The Bahamas, so we will never be political and will never be affiliated with anything that’s political with regards to this issue at hand, but we just want this matter to be resolved and done away with and we can move on with our lives and we can continue to put money into this economy and we can even diversify our current portfolio and hire more people.
“We continue to struggle with a fixed margin.”
In October, Prime Minister Philip Davis announced that the fuel surcharge for Bahamas Power and Light will increase incrementally over the course of months.
That means that businesspeople and other consumers will have to pay substantially more costs on their electricity bills.
Bastian said because gas stations, like hospitals and resorts, do not close, the financial strain from the increase will be unbearable for retailers on the current margins.
“We can’t afford a light increase,” he said.
“I want the Bahamian people to understand and I want the government to understand, all of the gas pumps and flash dispensers, they run on electricity. Whenever you walk inside the gas station, the air conditioning, that is electricity.
“And we are open 24/7, so when other businesses can close their business and save on electricity or save on the staff complement, we cannot because we provide an essential commodity.”
The minimum wage increase took effect on January 1. It went from $210 to $260 a week. Bastian said that has a direct impact on the costs being faced by retailers.
He said those retailers do not want to have to lay off any of their staff, but need the government to recognize that there is only so much they can realistically do under the current model.
“This got to make sense in 2023,” he added.
“We are starving. … Come on. Let’s work this out. We’ve talked. Let’s work this out.
“We have light bill increase and all the other indirect costs. What else can we do? People expect us to be open when they want to get gas.
“People expect us to be open when they want diesel. We’re in a dire straight. We need the prime minister to intervene. Let’s deal with this. We’ve talked, we’ve talked, we’ve talked. We’ve written, we’ve written, we’ve written. Let’s deal with this. Let’s get this over with. Let’s put this behind us. Let’s grow this economy. Let’s keep these people employed.”
Bastian added, “The responsibility and the onus right now is on the government of the day, not on us anymore. We’ve tried. We’ve done everything. We’ve talked. We want to work with the government. We ask them to work with us. Let us try and get this matter behind us. Dealers are frustrated. We are at our wit’s end.
“The buck stops with the prime minister. Please, Mr. Prime Minister, help us, so we can keep these people employed.”
Last month, after the association wrote the prime minister and Minister of Economic Affairs Michael Halkitis on the matter, Halkitis told The Nassau Guardian the government is not “deaf” to the concerns raised by the retailers.
“We are looking at it,” he said.
“Their proposal is that they want to go from a fixed margin to a floating margin, a percentage.
“Our view is we would look at it and study it and benchmark it against what other jurisdictions are doing, but primary in our consideration is we do not want to do something now that would lead to an immediate increase in the price at the pump. We think that would be counterproductive.
“So, we are looking and we hope to continue our discussions with them.”
Bastian said yesterday Halkitis has advised that the government will soon sit down with the association to discuss its concerns.
