The profits generated along the liquefied petroleum gas (LPG) – “cooking gas” — distribution chain is enough to share among all the stakeholders, Prime Minister Ralph Gonsalves says.
Some retailers have taken to the airwaves to complain about loss or reduced income after the government revised the price of cooking gas last month, for the first time since 2011.
As of last month, the maximum retail price for a 20-pound cylinder of cooking gas — the most commonly used cylinder in SVG — was reduced to EC$29 in Areas I and II, EC$30 in Area III, and EC$33 Area IV.
Before the reduction, consumers paid at least EC$41.80, depending on their area.
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“The way this has been done historically, right up to the present time, there is a margin for retail. The difference between the maximum wholesale price and maximum retail price, that includes the margin for retail,” Gonsalves said.
He noted that the maximum retail price for a 20-pound cylinder of LPG is EC$29, while maximum wholesale price is EC$$21.65.
This allows for EC$7.35 to be distributed among the different entities involved in the retail of the product.
He further pointed out that when the maximum retail price for the 20-pound cylinder was 41 dollars, the difference between the retail and wholesale price was nine dollars.
“So they had nine dollars and something for their margin. But one of the costs is a financing cost. So if you have less financing to do, are you going to expect the margin to be the same?” he said.
“I want journalists to go about and ask these questions: How is the seven dollars and thirty-five cents being divided between St. Vincent Motors and the reseller through St. Vincent Motors, or Sol and their resellers? How much is St. Vincent Motors keeping? How much is Sol keeping?”
“What about the persons who gets a slip of paper and goes to Sol or Rubis to collect gas, is Sol or Rubis getting the same mark up that they were getting before?
“Has it decided to take a cut from the nine something what it used to get? Has St. Vincent Motors done that?” Gonslaves further told reporters at a press conference.
“…Please, tell me, a bottle of gas, which is retailed at 21.65 I want somebody to tell me if the number of hands you have handling it, if they should get between them more than seven dollars and thirty-five cents?”
Taking the situation “to the absurd”, Gonsalves supposed that the maximum wholesale price of LGP were EC$10 instead of EC$21.65.
“You want to tell me that the retail margin must still be nine dollars and forty-two cents? It is true that there are some fixed costs — people have the bottles and you have to repair the bottles. But the bottles, you pay your down payment of $100, don’t you?” he said of consumers.
“And what is so amazing, some persons are so anti-national in their perspective and their instinct is just to go against Ralph and the government, but they are not concerning themselves with the consumer,” he said.
Immediately after the price adjustment, some retailers said they had suffered massive losses on their old stock as a result of the reduced prices.
President of the Consumers Association, Junior Bacchus, advised resellers to absorb the loss and sell cooking gas at the price approved by the government.
Gonsalves noted that Sol had written to the government saying that the wholesale price of a 20-pound cylinder of LPG should be EC$18.
“We consider the price of 21.65 to be a fair price for the maximum wholesale. … If the maximum wholesale price is 18 and you keep [the retail price] at 29 dollars, it means that they (Sol) will get 11 dollars between themselves and the resellers, but Rubis will bawl and say the 18 dollars is not enough,” Gonsalves said.
In addition to Sol and Rubis, PetroCaribe, a company owned by the governments of St. Vincent and the Grenadines and Venezuela, also sells LPG.
PetroCaribe has a 22.2-pound cylinder, which is 2.2lbs more than the other suppliers, but sells it at a lower price than the 20-pound cylinder.
PetroCaribe also distributes LPG.
Gonsalves noted that the prices in the different areas account for the transportation cost to Chateaubelair, north of the Rabacca Dry River, or to the Grenadines.
“The price which is set is the maximum retail price. Anybody can sell below the maximum retail price,” he said.