Business leaders warn of potential price hikes if electricity bills stay up

If there is a prolonged hike in electricity bills, the cost of living in Barbados will continue to rise, making it difficult for consumers and businesses to survive.

That is the view of chairman of the Barbados Private Sector Association (BPSA) Trisha Tannis and president of the Small Business Association (SBA) Neil Corbin who are hoping the increased rates are short-lived.

Last week, the Barbados Light & Power (BL&P) announced that due to dramatically increasing global oil prices, there would be a notable impact on the Fuel Clause Adjustment (FCA) component of bills for the month of April – approximately 45 cents per kilowatt hour, an increase of 22 per cent over March.

The news came just days after Prime Minister Mia Mottley warned Barbadians to brace for price increases as a result of the ongoing war between Russia and Ukraine.

Tannis told Barbados TODAY that all sectors would be impacted as a result of the increased FCA, which is a variable cost that is influenced by the cost of oil on the global market and is passed on to consumers.

“I think it will be a fairly obvious impact because fuel is one of those multi-sectoral inputs that affect you both directly and indirectly and, therefore, . . . with the kind of price hikes that we are being advised of from the BL&P, we certainly would be looking at some impact, both directly and indirectly, as it relates to electricity bills but also in the value chain as far as the price of goods and services on the island.

“The issue obviously is whether or not these are long-term impacts, in which case the likelihood of it affecting the prices of goods and services is much more likely. If it is a short-term impact you may get businesses trying to absorb it as much as they can or partially absorb it, so the issue really on the table is how far, how deep, how long. Anything that is sustained and should this crisis drag on for much longer, not just affecting the price of fuel but also the accessibility of some very core first inputs like wheat and so on, then we are looking at an across-the-board impact in practically everything that we consume. This is something that is not going to augur well for the price of goods and services on the island,” Tannis pointed out.

She added that the situation underscores “the urgency with which we need to get all of our renewable energy projects up and running; get the licenses issued; get the sectors and the investors with the capital off the ground and get the sector off and running”.

Meanwhile, Corbin lamented the continued high cost of living in Barbados.

He said if prices continued to increase, businesses and consumers would struggle to meet their expenses.

“I think it is going to be very deleterious to the small business sector. We are already paying premium pricing for electricity. It is basically pricing us out of the market as far as any manufacturing is concerned and the small business sector and consumers alike just cannot afford to pay any more,” Corbin contended.

“I don’t know where we’re going to end up with all of this to be honest, because everything is just going up and up and up and I guess there comes a point in time when there is just not any possibility of meeting the expense anymore.”

However, Corbin would not go as far as to say the increased electricity costs would force some businesses to shut shop.

“I am not sure if I want to go as far as to say that without actually seeing what kind of pricing we will be facing. I don’t think we’ve seen the percentage increase yet, therefore it may be a bit premature for me to say that it could make them close their doors, but I do know that we are under tremendous pressure right now with the current pricing, so to add to that now will certainly add to the pressure,” he said.
randybennett@barbadostoday.bb