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Is GOB’s butane monopoly the answer to the industry’s problems?

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Posted: Thursday, August 22, 2019. 1:01 pm CST.

By BBN Staff: The Belize Business Bureau (BBB) has pointed out several notable issues arising from the National Liquefied Petroleum Gas Project Bill (2019), which grants exclusive rights to import butane to a company established through a public/private sector partnership, but could the
established monopoly be the answer to a major problem faced by the industry?

The BBB noted, emphatically, that the new Bill: lessen consumer options, have a negative impact on the unemployment rate by forcing butane importers to close down and send their employees home; make Belize less attractive to investors due to the type of policies that
GOB implements, and have adverse effects on Belize socioeconomic makeup.

The BBB went as far as to call the Bill the ” worst idea for this decade.”

But the Government of Belize said that the motivation for the monopoly is the ability to dictate prices in the interest of the consumer. Prime Minister Dean Barrow explained in the House of Representatives that those that wish to remain in the butane business can simply buy from National Gas Company (Belize ) Ltd. and distribute.

“But we control what’s happening with pricing because we don’t have to listen, as the situation now is, to those who say, “Well we don’t care what you say.  Whatever reference point you go to this is what we say we pay for it, this is what we have to charge to get our markup and you will give us what we want, otherwise, we will cut off the supply of LPG to the country.”  It is that sort of thing that this bill is supposed to fix…” Barrow said.

Barrow was referencing a situation in 2018, where the three importers of butane in the country, Gas Tomza, Belize Western Energy Limited, and Z Gas, negotiated with GOB for an increase in the price of butane. Though there was never a shutdown of the supply of butane, the companies said to be owned by three relatives, had reportedly threatened to disrupt the supply of butane countrywide if there was not some form of increase given.

At the House of Representatives, National Deputy Party Leader of the People’s United Party, Cordell Hyde, said that “eighty-three percent of all households use butane.  It’s as essential as water, as toilet paper, as pack bread.”

Restaurants, hotels, resorts, and food vendors of every scale rely on butane to prepare their food. A shutdown of the supply like the one threatened in 2018 would put not only households but businesses countrywide, including those in the services sector which accounts for over 40 percent of Belize’s economy, in peril.

Hyde did voice serious concerns about the actual benefit of the monopoly to the consumer and said that he would like to see that the monopoly translate to cheaper butane prices.

It remains to be seen whether the move will bring about the stability in the industry GOB promised or the consumer abuse that the BBB forewarned. The Bill goes to the Senate on August 30 and in the likely  event that it is approved, it will go to the Governor-General after to be made into the law.  

 

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