NASSAU, BAHAMAS — Minister of Economic Affairs Michael Halkitis said notwithstanding the expressions of “one or two” petroleum retailers, the association that represents them has made no expression to the government of an intention to strike.
Prime Minister Philip Brave Davis and Halkitis are expected to meet with the association today to discuss challenges with the increased cost of fuel, high franchise and premises rental fees — all contributing to the financial pinch on operators.
Operators have claimed that the price at the pump affects — a rate set by oil suppliers and the government — affects their operations and erodes small profit margins.
Yesterday, the minister said the government does not benefit from the increase cost of fuel as its rate of tax remains the same despite pricing fluctuations.
“Firstly, the government is not benefitting from the increase in the cost of fuel because the government has a fixed tax on gasoline,” Halkitis told the media ahead of a Cabinet meeting at the Office of the Prime Minister.
“For diesel, it is a combination of a fixed and what they call an ad valorem, which means it fluctuates.
“But for gasoline, which most individuals consume, the government’s tax is fixed, so whether the price goes up or down, the government’s tax remains the same.
“So, it’s not that we’re benefitting from any increase in the price of fuel.
“We all lament the increase in the price of fuel brought on by external circumstances.”
Halkitis said the association wrote to the government outlining some of the challenges of its members, particularly increases in bank fees, fees for cash deposits, credit card fees, increased mortgage rates; liability and property insurance, among others.
He said the association has requested the government review the regime the dealers operate under.
The government has said it does not expect the price of fuel to exceed $7 per gallon at the pump on New Providence.
According to the association, 90 percent of its members wishes to engage in a lock out.
But Halkitis said there has been no “ultimatum” given to the government, and the meeting is expected to go forward in “good faith”.
“We did not receive in that letter any threat of strike by the Petroleum Dealers Association, and I think they quite rightly understand that when you are communicating with the government you do it in good faith, so we have agreed to a meeting,” the minister said.
“So, there is no threat from the Petroleum Dealers Association for a strike… maybe some element, one or two, but our communication so far with the association has not included any ultimatum whatsoever put to the government.”
Halkitis said the petroleum dealers have a “very high cost structure” and the government will seek to agree, where it can, in the spirit of working together to “bring them some relief”.
Halkitis pointed out that the price per barrel of oil stood at around $20 last year.
That price has since increased to well over $100 in large part to the Russian invasion of Ukraine.
There have been some reductions of late as the United States seeks to ramp up oil production, but the reduction has not yet been realized in The Bahamas.
The minister said the government is not minded to increase its taxation margin, which would lead to “more increases at the pump.
