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A Closer Look At The Plan To Create A New LPG Gas Consortium

A Closer Look At The Plan To Create A New LPG Gas Consortium
August 22
16:02 2019

The Energy Dollars in Your Kitchen

Thursday, August 22nd. 2019 – By Neri Briceno –

Much of Friday’s house meeting was spent chatting about China. Apart from the 50 million US dollar loan granted by the Taiwanese, there were some important pieces of legislation passed.

One that caught my attention, is the National Liquefied Petroleum Gas Project Bill. It’s a public-private partnership, a state-protected monopoly which will supply all the LPG – or what we call “butane” to Belize. It’s a major shift from the Mexican supplier, which owns all the major butane companies.

The issue of butane affects almost every household, so it’s being looked at very closely – from the shareholders of the company – called National Gas Company – to the 15-year term of the license, and the rate of return.

They are all minority shareholders and the largest shareholder is a mystery company from the US called BWT holdings LLP’ – sourced from Channel 7 News, Belize, dated Friday, August 16th, 2019.

While we were all caught up and distracted with who was old and who’s “Pa” we should tell, GOB was busy making monumental decisions about the economics of your kitchen. In an age of open markets and competition, I fail to see how a monopoly on the importation of LPG in the Belizean market will lower prices to the consumer if that is what the government is seeking to achieve.

If you take a look at market trends, especially those that affect the retail sector, it has become obvious that most governments today are trying to remove monopolies both in capitalist and semi-planned economies. Monopolies in any part of the world have the capacity to increase prices, create shortages, flood markets, dilute the product and ultimately shortchange consumers.

With the type of oversight that we have had in our nation, I am hard-pressed to be convinced that we are not creating another monster. The fact that the Prime Minister has emphasized that the National Gas Company will be composed of several persons across the political spectrum makes no difference since both blue and red parties love green.

What is certain is that if you look throughout the course of history, the fact and only constant with all monopolies is that they make a hell of a lot of money, for the simple reason that there is no competition. If you are the only person in town selling soap and people always need to do laundry and shower, expect to make a killing because I don’t see Belizeans going back to firewood washing anytime soon.

If you recall the glory days of BTL with limitless cash flow, that was because it was a monopoly. Opening an entire market to one entity and especially one in the energy sector is a big risk to the nation because it places the entire domestic cooking energy needs in the hands of one entity.

What happens if something goes wrong and don’t say it won’t, because something always does. Are we willing to put what is essentially the capacity to prepare and serve food and ability to feed ourselves in the hands of one company? Considering that the energy cost of cooking, which is what LPG is primarily used for in Belize affects just about everyone, one thing is certain and that is that someone will get very rich, very fast.

The big questions are – why wasn’t this offered for public tendering? Were others considered? Why is it that the same small group of people continue to benefit from literally everything when there are 398,000 plus Belizeans?

If government’s intent is to control the price to the consumer by means of a standardized controlled price, which varies according to location i.e. freight cost but is calculated based on acquisition cost – tell me – how that is different is from what is happening now?

However, if the idea is that by consolidating all Belize’s volume through one buyer will lower the consumer purchase price, then that’s a different animal. But why not sweeten that pie and have two importers to encourage healthy competition – which can only end up benefiting the consumer.

If the model is to mimic the one terminal importation of fuel, as in the case of Puma, then we are in for a long haul because that model is far from perfect and has never lowered prices.

Because of the strategic location of that terminal, the people of the south have been penalized the most in terms of fuel cost, because freight drives the price up – as much as $.35 per gallon. Multiply that by the millions of gallons that the south uses in fuel every month and you will get a picture of the savings that the south could have realized, had the terminal in Big Creek been allowed to stay open. But that’s another story.

So, what are the oversight measures being put in place to ensure that we are not creamed again by a new government creation? Who will confirm the LPG acquisition cost so that we are not fleeced? What will the price be pinned to – international market prices the faith of an invoice? And who will ensure the accuracy of that invoice and that the buyer is not over costing while receiving a rebate on the said invoice?

The number of tricks in the energy trade is so varied, I fail to see how GOB, which cannot even fix a road, will be able to monitor this. I believe that once again the Belizean public will be taken to the cleaners.

But, before I start yelling and as my friends would say before you see the sky falling, let’s just wait. Let’s see what else GOB will reveal about this new enterprise, how it will work and what check and balances will be put in place to ensure that Belizeans are receiving what we are paying for and that they are paying their fair share of taxes.

Let us see if they will reveal who BWT Holding LLP is – although I have a good idea as to who they are.

It’s all about the people!

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