The Bahamas Chamber of Commerce and Employers Confederation (BCCEC) support permitting oil exploration in Bahamian waters ...once regulatory safeguards were in place... ...potential earnings could "eliminate The Bahamas' National Debt in five years"

Chamber Backs Oil Exploration

By NEIL HARTNELL

#Tribune Business Editor

THE Bahamas Chamber of Commerce and Employers Confederation (BCCEC) yesterday backed permitting oil exploration in this nation's waters once regulatory safeguards were in place, telling Tribune Business potential earnings could "eliminate the National Debt in five years".

I Chester Cooper, the BCCEC's chairman, effectively told this newspaper that the Bahamas - and its economy - could not afford the 'opportunity cost' of passing up the financial benefits if commercial quantities of oil were found within this country's territorial boundaries.

Projecting that revenues worth a conservative $1 billion per year could be generated if the Bahamas Petroleum Company (BPC) and its joint venture partners were to discover oil deposits that could be extracted, Mr Cooper said the sector had the potential to "transform the economy" - both directly and through spin-off commercial activities.

Calling for a "non-partisan" debate on oil exploration in the Bahamas, the BCCEC chairman acknowledged that a comprehensive environmental, health and safety regime was required to protect this nation's environment and tourism industry.

Urging the Government to "get on with it" when it came to developing such a regulatory regime, Mr Cooper pointed out that the energy and tourism industries already co-existed in the Caribbean, in the shape of Trinidad & Tobago and Barbados. Cuba, also a tourism-dependent destination, has begun to drill in waters near its territorial boundaries with the Bahamas.

Emphasising that the BCCEC's support depended on the necessary safeguards being in place, Mr Cooper suggested it was time to lift the debate on oil exploration, and BPC's activities, to a higher level and away from being a 'political football'.

"Now that the political season is over, it is a good time to have a comprehensive, non-partisan debate on the issue," he said.

"We support the continued exploration of oil and, if successful, the eventual development of a safe and well-regulated industry. We urge the Government to quickly put the proper regulations in place for the orderly development of this industry."

Oil exploration was first seized on by the Democratic National Alliance (DNA) as an issue that it could exploit for political mileage in the general election run-up. Then former Prime Minister Hubert Ingraham attempted to use it, and BPC, to portray the Progressive Liberal Party (PLP) as 'conflicted' and unlikely to act in the nation's best interest, given that Davis & Co (now Deputy Prime Minister Philip Davis's law firm) and former PLP attorney general, Sean McWeeney, were named as the company's legal advisers.

There were then suggestions that Prime Minister Perry Christie had acted as consultant to BPC while in Opposition. Eventually, the PLP pledged to hold a referendum on whether oil drilling and exploration should be permitted in Bahamian waters, while Mr Ingraham backtracked from an earlier position that the FNM would not permit the industry if re-elected.

Ultimately, the former Ingraham administration returned to its already-stated position that oil drilling would not be permitted, and no new licences issued, until an appropriate regulatory regime has been implemented. Government officials have already visited the likes of Norway and the UK to examine those countries' regimes, and what the Bahamas can learn from and bring here.

Nevertheless, just prior to the general election, the Government decided not to renew the five BPC licences that expired on April 26, 2012, and returned the company's $300,000 fee payments to it. This leaves the ball very much in the newly-elected Christie administration's court.

BCCEC chairman Mr Cooper, meanwhile, indicated that the tremendous economic benefits - if oil was discovered in sufficient quantities in Bahamian waters - meant this nation, with its limited natural resources, narrow economic base and troubled government finances, could not afford to spurn this opportunity.

"The likely revenues can eliminate the National Debt in five years and contribute significantly to education, healthcare and development of infrastructure across the country and, importantly, an expansion in GDP leading to more favourable economic metrics," Mr Cooper said.

He added that the revenue generated from oil exploration could be used to reduce import tariffs on oil imports, reducing energy and gasoline costs. This, in turn, would lower the cost of living and doing business in the Bahamas, and make this nation much more competitive in attracting foreign direct investment (FDI).

"We cannot afford to be dismissive of these realities," Mr Cooper said, acknowledging that a proper regulatory regime - and its enforcement - were "a must" to preserve the environment and tourism industry.

Noting the example set by other Caribbean nations, he added: "It doesn't have to be one or the other - both can co-exist. It is being done in the region, in Barbados and Trinidad & Tobago.

"Clearly, the risks can be managed. We further understand that the Cubans are drilling right across the Bahamas' border. So we need not re-invent the wheel with respect to the regulations. We can draw on our friends in the international community with tried and tested regulations, like the US, UK, Trinidad and the Clean Caribbean Initiative."

Calling on the Government to "get on with it" when it came to developing a regulatory regime, because the opportunity cost of not doing so was too great, Mr Cooper said the Bahamas had to ensure its people were either trained abroad - or qualified Bahamians enticed back home - to participate in the oil exploration sector.

The BCCEC's energy and environment committee, he added, felt there was too much misinformation circulating on oil exploration, and called on the Government and BPC to better educate the public. The BCCEC is also planning to start discussions by hosting a luncheon on the topic shortly.

May 18, 2012

tribune242

Caribbean Blog International

Bahamas Chamber of Commerce and Employers Confederation's (BCCEC) chairman Winston Rolle says: ...any increase in pump gasoline prices could not be coming at a worse time, since it could further depress prospects for a Bahamian economic recovery

Chamber chief: Gas mark-up increase 'very concerning'

By NEIL HARTNELL
Tribune Business Editor
tribune242


The Bahamas Chamber of Commerce and Employers Confederation's (BCCEC) newly-elected chairman has described as "very concerning" the impending mark-up increases for petroleum retailers, warning that it would hit consumers and increase "the cost of doing business".

While expressing sympathy for the plight of Bahamas Petroleum Retailers Association (BPRA) members, Winston Rolle indicated to Tribune Business that any increase in pump gasoline prices could not be coming at a worse time, since it could further depress prospects for a Bahamian economic recovery.

Responding to this newspaper's Friday report on the Government agreeing to an increase in the per gallon gasoline and diesel mark-ups for petroleum retailers, Mr Rolle said this would only further increase business and consumer costs at a time - the summer - when global oil prices traditionally peaked, compounding the effects.

"That's very concerning," Mr Rolle said of the Government's decision. "While I understand the plight of the operators and their profit margins, you can appreciate the impact that is going to have on the cost of doing business. With gasoline prices increasing, costs are going to go much higher."

Apart from Bahamian consumers, who will feel the impact in their bank balances and disposable income levels, others likely to be heavily impacted are transportation-dependent businesses such as taxi drivers, jitneys, tour operators and all companies that rely on making daily deliveries - such as wholesalers.

"What most persons had hoped, and I guess the Petroleum Retailers Association had hoped, was that the Government would relax some of their tax take and give them the spread they need," Mr Rolle added, "but not impact the overall cost to the consumer."

Earl Deveaux, minister of the environment, on Thursday last week indicated that the Government had agreed to lobbying by the BPRA and Marina Operators of the Bahamas (MoB) for an increase in the fixed margins they can charge per gallon of gas and diesel sold.

No details were provided, but there were indications the increase would take effect within the next month. The change is also likely to see an increase in the existing margins, which are $0.44 per gallon of gasoline and $0.19 per gallon of diesel, rather than a percentage increase that the BPRA and MoB had pushed for.

Whether the increases are of the amount sought by the BPRA is also unclear. Another unknown is whether the wholesale margin enjoyed by the oil companies, FOCOL, Esso and Texaco, which are currently pegged at $0.33 per gallon will also be increased. Noting that "we haven't really hit the summer months yet", a time when global oil prices traditionally peaked, Mr Rolle added: "It's very concerning because you're going to have an increase through the adjustment made by the Government and, on top of that, in the coming months we'll see another increase based on the cost of oil worldwide.

"We're very sympathetic and do not want to put anyone's business in jeopardy, but the hope would have been that the retailers and government worked out some middle of the road, where no one takes a substantial loss. Right now, all of this is going to fall on the consumer."

Given that almost two-thirds of Bahamian economic activity stems from consumer spending, that is worrying in and of itself.

One business executive, speaking to Tribune Business on condition of anonymity, agreed with Mr Rolle that the move would "increase the cost of living to the consumer", describing it as "just another band aid approach".

Ultimately, the source said, without fixing the existing pricing structure this situation would eventually arise again, with BPRA members clamouring for further margin increases further down the line. Gas margins were last increased under the first FNM government, the source said, yet almost 10 years later the Bahamas was here again, and with the same arguments being made.

Gas prices were already extremely high, and the Government's decision meant they were likely to go higher on the grounds that dealers needed more money.

"You have to go back and look at this system that doesn't make sense at all," the source said. "If you don't solve the problem correctly, in a couple of years you're going to do the same thing."

The solution, the source said, was for the Government to reduce its $1.06 per gallon tax, plus 7 per cent Stamp Duty on the cost of landed fuel, something it is unlikely to do when desperate for every cent of revenue. The other issue, they added, was the rents, royalties and franchise fees levied on the BPRA and its members by the oil companies. The source identified these and the Government taxes as the major problem, together with an over-supply of service stations.

"When you look at the amount of service stations per square mile in Nassau, you've got more than in Florida. Something's got to be fundamentally wrong there," the source said, suggesting there needed to be consolidation.

"For an island 21x7, we should not have so many service stations in close proximity. That's the only way to begin to drive costs down for Bahamian consumers."

Rick Lowe, a leading executive with the Nassau Institute economic think-tank, told Tribune Business the episode showed price controls "certainly belong in the dustbin of history. The market is the market, and you can restrict it, manipulate it and put people out of business, but sooner or later reality has to come".

July 04, 2011

tribune242

Caribbean Blog International