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The Butane Price War & G.O.B’s New Legislation

The Butane Price War & G.O.B’s New Legislation
December 07
17:43 2019

Thursday, 05 December 2019

On Wednesday, at a Special Sitting of the House of Representatives, the Government introduced legislation to institute a floor on the price that importers can charge for Liquid Petroleum Gas, and explained that there will be an addition SI to allow for penalties for butane importers to be penalized if they do not abide by Government’s controlled prices which will be in effect if and when the law is passed.

In an interview earlier this week, Minister of State in the Ministry of Trade Tracy Taegar Panton explained that the three importers of butane into the country, three brothers operating Zeta Gas, Gas Tomza and BWEL, had introduced what is called predatory pricing. Since all three also sell butane retail as well as supply to local retailers, the companies were underselling the retailers, in effect an orchestrated move to drive them out of business and control the market, according to Panton.

According to Panton, because of that move, consumers will experience lower prices for butane as long as the three importers continue to drive down prices, but it will only be in the short term. The Opposition People’s United Party, however, asserted strongly in the House that any benefit to consumers is to be supported, and not stifled by Government, as they claim this legislation will do.

In the House on Wednesday, Caribbean Shores Area Representative Kareem Musa condemned the move by government as no less than an assault – “I believe that this particular act is a direct assault on the vast majority of poor and middle class Belizeans, because they are the consumers of butane and even if it is only for a very temporary short period of time that the distributors in the city and in the country are provided this reprieve, this discount, this low price of butane, why are we attacking the poor people especially at this time of the year?”

In the House on Wednesday, Prime Minister Dean Barrow stated that government met with 26 local retailers who complained that the ‘predatory pricing’ by the importers was looking to put them out of business. “Then when every one of the 25 plus Belizean retailers would have been driven out of business – when they came to us, some of them were on the point of shutting down. What you think these people who controls everything would have done? They would have then taken it up 3, 4, 5 times above the market thing and when it is the Ministry’s duty to do – when the Ministry would have said to them, no, you can’t sell – then they would cut you off. Then we will not import. They have done it before,” the Prime Minister stated.

One large local retailer spoke to the Reporter on the condition of anonymity, and supported what Panton, and indeed the Prime Minister are claiming. According to the retailer, they are supplied the butane by the importers, but have to assume all other costs to supply to consumers, including freight, staff, facilities and all operational costs. The retailer claims that the three importers then turn around and supply the butane to consumers at a cost so reduced that retailers cannot match it, considering their own cost of doing business.

“I agree with Government’s move, because these guys have the power and the money to drive all retailers out of business and to control the market. They are a cartel, a mafia. And if they drive all of us out of business, then they will have the power to dictate prices because they will be able to shut off supply and effectively lock the country down,” the retailer told this newspaper.

It was a story in the Business Perspective section of the Reporter, last week’s issue, which brought the situation to the forefront, and raised the question – if the butane importers are now able to lower butane costs at their whim, could they not have been doing so for a long time? According to Minister of State Taegar-Panton, the new company which will control butane importation, the National Gas Company Limited, is expected to come online in six months.

The Reporter’s Business perspective states that “actually, the very justification for the soon-to-come Company is that the prices to the consumers could have always been lower, especially when one recalls that even in the example utilized in the feasibility study a commodity that lands in the country at BZD$1.85 (at those past prices) had been sold at its regulated retail (ceiling) price of more than $5.00 per gallon—a difference of more than $3.00 per gallon. Viewed from this perspective, it certainly adds credence to the argument presented by the principals of The Company that the prices could have indeed been lowered to the benefit of consumers for some time now.”

As regards that new company, in the House Lake Independence Area Representative Cordel Hyde, asserted that “It means that the ordinary people of this country have been fleeced, have been shafted. I am not in the business of being shafted. Don’t come to tell me it is some new people who will shaft us. It is locals that will shaft us, it is not foreigners who will shaft you. I don’t care who it is, I don’t want anyone to shaft me.”

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