The Rise of LPG Prices
The increase in the price of LPG, which was announced on Monday, is not sitting well for consumers and three former LPG importers as the country battles with the impact of the COVID-19 pandemic. The prices went up by thirty-eight cents per gallon which, combined with a first increase, means that consumers are spending sixty-nine cents more per gallon of LPG. Attorney Audrey Matura, who represents the former importers Gas Tomza, Z Gas and BWEL, says it is an exploitation of the Belizean consumers and the doing of the monopoly National Gas Company and the government. Here is News Five’s Hipolito Novelo.
Hipolito Novelo, Reporting
“On October third, 2019, Prime Minister Dean Barrow said this:
Dean Barrow
Prime Minister Dean Barrow [File: October 3rd, 2019]
“You’ve seen where one of the investors of the company Mr. Bowen is saying look if we cannot bring in the LPG cheaper than is the currently the case, I will in fact eat my hat or he has done better. He said he will make a contribution to the difference to some kind of charity or something like that. This is how convinced everybody involved in the National Gas Company is that we can bring it in cheaper that we currently the case.”
That was eight months ago and on Monday, a new fixed controlled prices for liquid petroleum gas, butane, took effect. It reflects an increase of thirty-eight cents. The prevailing sense was that tax concessions given to the National Gas Company Limited and control over the importation of LPG, would bring prices down. The new prices were announced by the Belize Bureau of Standards.
On the Phone: Jose Trejo, Director, Belize Bureau of Standards
“As we published yesterday the new prices the second shipment came into the country I think last weekend. So as a process of calculating the price build up we now have a change in the wholesale price and as a consequence of that because of an increase in the acquisition prices for both propane and butane the whole sale and the retail, urban and rural have increased as a consequence of that.”
LPG retail price has been fixed to four dollars and twenty-four cents, an increase of thirty-eight cents per gallon, in urban areas while in rural areas the increase is higher, now selling at four dollars and thirty-four cents. At the wholesale level, the price is two dollars and sixty-four cents in all districts. The government stripped Central American importers, Gas Tomza, Zeta Gas and Belize Western Energy Limited from importing butane. The companies’ attorney Audrey Matura says that the price for butane has increased twice in the last month.
Audrey Matura
Audrey Matura, Attorney
“We already had a thirty one cents increase in May, fourteenth of May. Now yesterday, fifteenth of June they announce another increase. That increase is of thirty-eight cents more for both wholesale and retail. So now the new wholesale price is two dollars and sixty-four cents. The new retail price is four dollars and twenty-four cents. What I want I want the Belizean public to realize that within the span of just a month, we are paying now sixty-nine cents more on the gallon.”
Back in May Director of the National Gas Company Limited, Doctor Gilbert Canton told News Five that one point four million gallons of LPG were on stock at the Big Creek Port. The second shipment was received on June ninth. Doctor Gilbert Canton says that the hike in prices is due to an increase in acquisition prices for LPG. Canton says that it is the international (Mont Belvieu index) price which is being paid.
Dr. Gilbert Canton, Director, National Gas Company Limited
“If you look at what is happening in the States, in the US Gulf Coast you will see that LPG has been increasing in price rapidly. It went to a low; I think the lowest was late March, early April. I don’t have the numbers in front of me but I know at it to a low in early April and since then it has been climbing rapidly. So basically the increase in price that is being seen in Belize right now is a reflection of that increase cost of purchasing it from the US Gulf Coast. That is the only parameter that is changing in the formula to come up with the final price, as far as I know.”
Given the increased prices, Matura says that her clients can no longer sell at wholesale and distribute because no profit would then be made. But she contends that her clients could have imported butane at a cheaper price.
Audrey Matura
“So they have relegate them to retailers but the if they put them in retailers then they compete with all the other retailers. Somebody is being kicked out of the chain. And the reason they have boxed out my three clients is because with them in the picture there would have been competition. They would have been able to bring their own petroleum at a cheaper rate that the government that is bringing it right now through the national gas company. Actually my clients sent me proof that they can actually get it cheaper by thirty to thirty two cents less than what the government is quoting. It is a little bit complicated but they the formula here. They have in their secret agreement, their accommodation agreement signed by the government on the tenth of July 2018, almost two years ago. In it they have a formula and in the formula no matter what the prices go up worldwide, the National Gas Company will always make a dollar and sixty cents on each gallon. When my clients were in the importation business, what they did, they got the Mont Belvieu price and the only markup my clients could ever get was forty cents per gallon.”
Doctor Canton is unable to say if the Mexican importers can or cannot import LPG at a lower price. He says that at this time around, the demand has actually been greater than expected. Belizean can expect the price of LPG to fluctuate.
Dr. Gilbert Canton
“That is exactly what is happening, Hipolito. The thing is we have a shipment coming in about every month or month and a half. SO every month or month and half there should be a new price. Hopefully next time we go about the price setting there will be a decrease in the purchase price. I don’t know how long this price will stand internationally.”
Reporting for News Five, I am Hipolito Novelo.
