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Business Monday: Time to pay
7/2/2012
THE days of cheap oil are over!
So says Finance Minister, Christopher Sinckler, while responding to calls from the Opposition to give Barbadian consumers some relief from the high price of gasoline, through a reduction of pricing by the Barbados National Oil Company Limited (BNOCL).
He said that the Opposition appears to be caught up in cheap oil. “But that is done. You cannot continue to try to tell Barbadians that those days are going to come back,” according to the Minister who insisted that the world has changed.
Oil prices have remained in the vicinity of US$100 a barrel. In 2008 it reached a high of US$149 a barrel.
Both Sinckler and Mottley were locked in cross talk and went back and forth over whether the BNOCL was overcharging the Light and Power for oil used in the generation of electricity.
Quoting information he said came from the BNOCL, Sinckler said that the company was selling Light and Power at US$104 a barrel. The margin to BNOCL is 37 cents.
Mottley said that there is no oil company which is going to produce oil at the world market price and sell it at the same price. “They produce at a far lesser price and sell at a world market price at a profit,” the Opposition MP said in the House of Assembly.
“Our simple contention is: do not make a profit on the people of Barbados when they are suffering,” Ms. Mottley declared. She also promised that a BLP Government would reduce electricity prices in Barbados.
Meanwhile Sinckler said that total amount of debt run up under the subsidy was $213 million. He said the company had recouped $130 million and that there is still some way to go in terms of those subsidy charges.
He questioned how is it that Nigeria, a net exporter of oil, had stopped subsidies to people because they said they were unable to bear it and asked how is it that Barbados, a tiny producer, should be engaging in such strategies.
However, Mottley insisted that what she spoke about in her presentation was not a subsidy. “There are not subsidies; they are allowing Barbadians to pay the true cost based on the cost of production of the BNOCL. It is not a subsidy,” she declared.
The Minister said that the previous Government had brought the BNOCL to its knees by way of a subsidy given to Barbadian consumers of gasoline and electricity. “It cannot afford to go back there,” he remarked.
“It has huge consolidated debt of $120 million for the Terminals which still has to be paid for.”
According to him, the oil company’s books look good by themselves, but when you take the accumulated debt and matched them with whatever little profit it has been able to make in the last year or so, it pales in significance,” according to him. (JB)
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