There was a Senate Meeting in Belmopan today to follow up on the government business that was tabled in the House of Representatives on Wednesday. But, the most polarizing draft legislation of the day was the Supplies Control Amendment Bill of 2019.
As we told you, this is the Government's fix for the pricing issues within the LPG industry, which we call butane.
The problem started with the passage of the National Liquified Petroleum Gas Project law several months ago. That law tried to break up the monopoly that the 3 LPG companies, all owned by 1 Mexican family, held on the importation of butane in Belize. So, according to the Government, these companies retaliated by engaging in what is known as predatory pricing. While they can't control the importation of butane anymore, they still have major influence over the retail market. So, according to the Government, they instituted a plan to drive the local butane retailers out of business.
The idea behind it is that they are selling butane at rock bottom prices while taking the financial hit, which they can do as big companies. The Belizean consumers start to buy the fuel at these discounts, but local retailers, such as Brown's Butane in Belize City, won't be able to compete. With fewer customers, these local retailers will slowly be driven out of business, and so, the large companies get to re-establish their monopoly on the industry.
Well, with this amendment, the Government is making that type of predatory pricing illegal by ensuring that there is the lowest price that all butane retailers have to respect and sell LPG at. The Opposition has interpreted that to mean that instead of consumers, who would prefer lower prices, will suffer for this "trade war" with the Mexican LPG companies.
Here are a few excerpts from today's robust debate over it in the Senate:
Michel Chebat, P.U.P. Senator
"This piece of legislation reeks of protectionism. This piece of legislation is to support the National Liquefied Petroleum Gas Company which comes into effect in January 2020. This piece of legislation Mr. President is not to protect small retailers as it is couched. This piece of legislation Mr. President is essentially denying lower butane prices at a time Mr. President when we are in the Christmas Season when we all know when everybody is baking and doing their turkey and so on. Why? Why like the scrooge of Christmas we are taking away a small little benefit from the consuming public? Why is it that we are denying them cheaper butane prices?"
Aldo Salazar, U.D.P. Senator
"The criticism of this bill coming from the other side is simply put that you are not being able to see pass your nose because of politics. That is basically where we are. Because of politics we are looking to criticize this. Mr. President this has nothing to do with the National Gas Company. This has nothing to do with protecting National Gas. That is derived from a lack of understanding of what we just did recently with National Gas."
Ashley Rocke, Senator for Churches
"When you look at the bill and how Belize was being fleeced for so many years by these people and the fact that the whole intention seems to be to close down the small man and take away the benefit from him in his little company and then the fact that there is a new animal that is coming on stream I think it was incumbent then to protect the small investors from maybe the big boys as somebody would say."
Elena Smith, Labour Senator
"Government passes laws to set monopoly in LPG. Importers responds with a purported round of predatory pricing. GOB responds by setting a floor. So we have to ask then where are the numbers from the study conducted on the retailers that indicate their average operating cost? Their stock turnover? Their average price? Average acquisition cost? How can the government be sure that these people are actually getting price out of business? Is this SI that is deemed to protect the Belizean consumer just a part of this small trade war with this allege LPG cartel."
Mark Lizarraga, Senator for the Business Community
"So we are going to war. Too late. We advised in this very parliament not too long ago that we needed to look at a formula for retail as well. We advised, we foresaw. We applaud the government for finally taking a stand for the retailers in this country, because we have seen too many retailers left to die. In that regard we applaud them. It's a pity that we had to take people begging at the point of tears. We've seen so many retailers in this country been taken advantage of by large people who the government continues to pick as winners and losers."
"This cartel as it has been labelled was allowed to operate for so long without any checks and controls."
Herbert Panton, UDP Senator
"With the advent of this new national gas company the cartel will be put out totally out of the importation of butane into this country. So what do they do? Well they don't want to give up business. They certainly have a lot invested here, so they saw okay, we can't no longer control the importation, we will control the retail and how will we do that? They continued to see butane to the small suppliers at the same price and in their retail business they dumped butane on the market. Butane was going as low as $2.95 per gallon. In the case of the dumping, Dangriga took on a new creature for 2 days. The suppliers in Dangriga gave away butane."
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