The government is not considering increasing the profit margins for petroleum retailers, despite some petroleum retailers temporarily halting diesel sales, and the association representing them warning that “further action” would be taken if the government does not address their concerns, according to Minister of Economic Affairs Michael Halkitis.
Petroleum retailers are lobbying for an increase in their profit margins, which are controlled by government.
“Our position is it remains that the government of The Bahamas is sympathetic to their plight, but at this time, with conditions as they are, we are not considering any increase in the margins,” Halkitis told reporters during the Office of the Prime Minister’s Weekly Press Briefing yesterday.
“The position of some of the retailers is that the profit that they’re making on it currently is not sufficient for them to continue. We hope that they reconsider that.”
The Bahamas Petroleum Retailers Association (BPRA) said in a statement released shortly before Halkitis’ comments, “We are hopeful that we will hear from the government today. However, failing resolution to this matter we will have no choice but to take further action.”
The association did not indicate what further action would be taken.
On Monday, some petroleum retailers on New Providence stopped selling diesel, with BPRA president Raymond Jones saying retailers were losing out in selling diesel.
The move worried some, including taxi drivers and bus drivers whose vehicles primarily use diesel fuel. However, not all gas stations stopped selling diesel.
Some Shell gas stations continued selling the fuel. On Wednesday, gas stations resumed diesel sales.
“Petroleum retailers are demanding to be treated fairly in the face of unbearable rising cost with this low fixed margin,” the BPRA said.
“Petroleum retailers are in a desperate place financially. The actions taken earlier this week with not selling diesel is an effort to bring this margin issue to conclusion.”
“Despite statements made, rest assured the petroleum dealers are united in this cause to obtain an increase in the fuel margins. We are quite aware of the importance of fuels to our customers and equally we are committed to provide that service and as such we have restarted diesel sales.
“We need the government back at the table to conclude the deal that was presented.”
But if government does come back to the table, it won’t be with a margin increase in mind, according to Halkitis.
“I should also say that, when we say we are sympathetic, we’ve been having these discussions for many, many months,” Halkitis said.
“The government last year provided tax rebates to the tune of $6 million to the retail petroleum dealers. Five and a half million in cash, and half a million is to offset some of the taxes that were owing.
“So we have made an effort to help to ease their burden and given some support to give them some breathing room. We know that that helps. We just continue to ask them, it’s a difficult situation for all. So it would just be not in for us to consider raising prices at the pumps at this time.”
Fuel retailers earn a fixed profit margin of $0.54 for every gallon of gasoline they sell. The margin is $0.34 for diesel.
The BPRA argues that those margins aren’t sufficient due to increases in operating costs.
“Of course, we want to continue conversations,” Halkitis added.
“We don’t want the easiest solution; as far as the dealers are concerned [that] is to give them a margin increase.
“What that does is everybody goes to the pump and pays more. All of us, right. And so as I said, we’ve been having these discussions for a long time.
“Global conditions are such that prices are high. Part of our solution – and our accommodating was to give the tax rebates last year – we thought that would give some breathing room. We think it did. So we continue to try and seek a solution, but it’s not as simple a solution as give a margin increase that will increase the price for everybody, or take the tax off of diesel or whatever, which only means that the government’s revenue will fall short and you have to go borrow the money to fill up the gap.
“So there are some proposals going back and forth. We continue to discuss them. It’s a very difficult situation, and so that is why the prime minister would say we continue to talk, exchange proposals to see how we can help.”