Fuel Dealers Push Back Against Government Margin Cut

Government has moved ahead with a unilateral reduction in fuel dealer margins, a decision that is drawing strong concern from gas station operators across the country.  In a letter issued this week, government informed fuel dealers that despite objections raised by the industry, it would proceed with reducing dealer margins for an initial six-month period. The change took effect yesterday and converts the dealer margin from a percentage-based formula to a flat rate system.

Fuel dealers argue that the adjustment could reduce their earnings by between six and thirty-five percent per gallon depending on the type of fuel being sold. Some operators have also raised concerns that the move may violate a longstanding 2004 agreement which reportedly required both government and dealers to mutually agree in writing before any changes to the pricing formula were implemented.  Prime Minister John Briceño has defended the decision, saying government, consumers, and fuel dealers must all share the burden as global fuel prices continue to rise.

Reporter: The fuel dealers were notified yesterday that their margin was being reduced by the government. They are saying this is a unilateral and that a 2004 agreement with the government required that both sides agree to any change to the formula in writing. Can you comment?

John Briceño, Prime Minister of Belize: “I’m not aware of that, of that, that 2004 agreement. But what has happened that in 2004 the government then decided to set the margin based on the cost of fuel. So the higher the cost, the more the margin increase. And so there has been because the price of fuel has been going up their margins continue to go up. And all of us have to take a cut. Because when they, their margin increase, who pay for ? The consumers? So if they can cut a little bit and by setting their margin on a flat rate, and then we are cutting the tax, all of us are doing a little bit, whatever bit we can, to be able to hold down the increase of price of fuel as best as we possibly can.”

Briceño also indicated that while government has already implemented the changes, it remains open to dialogue with fuel dealers amid reports that some operators are considering industrial action.  Another issue being raised by dealers is the growing use of debit and credit card transactions at fuel stations. Industry sources say banking and card processing fees now consume an estimated twenty-two percent of dealers’ total gross margins, further tightening profitability at the pump.