Local economist Jeremy Stephen is calling on Government to disclose how it plans to protect consumers once the planned sale of the country’s sole oil terminal to a single private entity becomes a reality.
The state-run Barbados National Oil Company Limited (BNOCL) last week confirmed an agreement had been reached with the Sir Kyffin Simpson-led Sol Group for the sale of its subsidiary, the Barbados National Terminal Company Limited (BNTCL).
However in a live Facebook broadcast on Saturday, Stephen expressed fears that without proper regulations the market could be exposed to manipulation of volumes.
“The BNTCL, outside of Light and Power, is the only place that could store oil and gas and jet fuel. That is essentially the value of what is paid for. Also it is the main distributor of oil on the island . . . . It is now clear, based on Rubis’ objection, that they are not participating in the said deal. How can we not say, without more terms being brought to the table, that Sol now has monopoly over the storage and distribution of fuel oil?
“The most significant input in our daily lives is oil. Will Government show the political will through an Act of Parliament to grant BNOC regulatory powers over a couple of things that Sol can now do? Sol is a business first and foremost and as such can effectively decide that in anticipation of oil prices increasing in the future, create an intentional shortage because in Barbados they don’t really allow the use of hedging,” Stephen said.
He made reference to the decision by the Organisation of Petroleum Exporting Countries (OPEC) in 1973 to cease oil exports to the United States for six month. The effect was the quadrupling of oil prices.
Stephen contended that acquisition of BNTCL would mean that the Sol-Group had the means to price its competition out of the market.
“They can easily price [their competition] out of the market. They can effectively sell the price to their competition at a price higher than what they could attain. In addition they would be getting their oil at a cheaper cost than Rubis to begin with. They could also create intentional shortages to said people,” Stephen stated.
Chief Executive Officer of Rubis Caribbean Mauricio Nicholls had released a statement last Thursday describing the sale as the “creation of a private monopoly that would control all storage and importation of fuels in the country”.
Nicholls said Rubis had already raised objection with the Fair Trading Commission (FTC), as well as with the Ministry of Energy, but no response had been received from either Government entity.
“Rubis expects the FTC to conduct a full and detailed review of the transaction and that the FTC will object to it due to the effects it would have on the competition and the significant impact it could have on fuel prices,” the Rubis CEO had said.