Categorized | Local, News

Government sets new fuel margins for Retailers

Hon. Claude Hogan

Hon. Claude Hogan speaking at Gap Analysis workshop

Petrol station owners on the Whitsun holiday weekend threatened and attempted a shutdown of their services for what they described a “necessary step due to unsuccessful negotiations with the Government of Montserrat to address the cost issues which relate to margins set by the government.” (see: http://www.themontserratreporter.com/gas-stations-threaten-shut-down-to-influence-price-markup/)

“Following meetings between the retailers and Government of Montserrat (GoM), through the Ministry of Trade and via the media’s direction to a release placed on the Government website, stated: “The Government of Montserrat has approved a new Retailers Margin for local retail of gasoline and diesel provided by Delta Petroleum (Montserrat) Ltd to cover inflation; a franchise fee; and insurance risk cover for petrol stations on Montserrat. There is no increase calculated for the profit or mark-up allowed to petrol operators.”

Delmaude Ryan - Minister Health, Education...

Delmaude Ryan – Minister Health, Education…

The release advised, adapted for presentation: “The Retailers’ Margin increase was built up from $0.55 to $0.75 as follows:

  • Adjustment for Inflation at 20% = $0.11
  • Franchise fee erosion = $0.06
  • Insurance cover = $0.03
  • Total Adjustment = +$0.20

After the deduction of current contracted expenses with Delta Petroleum (Montserrat) Ltd. ($0.06 for pump and ancillary rentals) plus ($0.06 for the Delta Franchise fee), retailers will have a new margin of $0.63 to cover operations expenses, fees, and other unavoidable cost.

This amount also includes the retailers profit or mark-up as recommended by a GoM Consultancy Report, which was discussed with Delta Petroleum (Montserrat) Ltd.

The GoM notes that fuel stations are low profit earners internationally and therefore usually operate alongside another business.

The $0.63 now available to retailers, after Delta contractual deductions, now compares favourably with other regional retail margins as below:

  • British Virgin Island – $1.08
  • Nevis – $0.58
  • Kitts – $0.70
  • Anguilla – $0.99
  • Montserrat – $0.63

Delta Petroleum (Montserrat) Ltd has welcomed the retailers’ margin adjustment as “allowing it to continue to provide service to the best of its ability.” The current two Delta petrol retailers in Montserrat are A&F Service Station in Sweeney’s and Osborne Petrol Station in St Peter’s.

As at Friday, May 26, 2016, the current prices for fuel inclusive of the new Retailers Margin are:

Gasoline:                         Diesel:

Duty Free $8.36              $6.96

Wholesale $10.66            $8.00

Retail $11.41                   $8.75

These prices remain lower than the lowest prices of 2014 which was $13.79 per gallon for gasoline and $12.99 per gallon for diesel. It is further noted that this increase in retailers’ margin would not affect the price at which Montserrat Utilities Ltd (MUL) purchases its diesel for electricity generation. MUL purchases diesel from Delta on a different pricing arrangement.

Certain GoM premises (Govt. HQs etc.) will continue to purchase duty free fuel from Delta. In the meantime, a new 6,000 gallon tank has been proposed to be erected at the Delta Bulk Station at Carr’s Bay. This tank is to offer a new Ultra Low Sulphur Diesel for use by Public Works and certain vehicles that perform at their optimum with this type of fuel.”

Leave a Reply

Newsletter

Archives

Hon. Claude Hogan

Hon. Claude Hogan speaking at Gap Analysis workshop

Petrol station owners on the Whitsun holiday weekend threatened and attempted a shutdown of their services for what they described a “necessary step due to unsuccessful negotiations with the Government of Montserrat to address the cost issues which relate to margins set by the government.” (see: http://www.themontserratreporter.com/gas-stations-threaten-shut-down-to-influence-price-markup/)

“Following meetings between the retailers and Government of Montserrat (GoM), through the Ministry of Trade and via the media’s direction to a release placed on the Government website, stated: “The Government of Montserrat has approved a new Retailers Margin for local retail of gasoline and diesel provided by Delta Petroleum (Montserrat) Ltd to cover inflation; a franchise fee; and insurance risk cover for petrol stations on Montserrat. There is no increase calculated for the profit or mark-up allowed to petrol operators.”

Insert Ads Here
Delmaude Ryan - Minister Health, Education...

Delmaude Ryan – Minister Health, Education…

The release advised, adapted for presentation: “The Retailers’ Margin increase was built up from $0.55 to $0.75 as follows:

After the deduction of current contracted expenses with Delta Petroleum (Montserrat) Ltd. ($0.06 for pump and ancillary rentals) plus ($0.06 for the Delta Franchise fee), retailers will have a new margin of $0.63 to cover operations expenses, fees, and other unavoidable cost.

This amount also includes the retailers profit or mark-up as recommended by a GoM Consultancy Report, which was discussed with Delta Petroleum (Montserrat) Ltd.

The GoM notes that fuel stations are low profit earners internationally and therefore usually operate alongside another business.

The $0.63 now available to retailers, after Delta contractual deductions, now compares favourably with other regional retail margins as below:

Delta Petroleum (Montserrat) Ltd has welcomed the retailers’ margin adjustment as “allowing it to continue to provide service to the best of its ability.” The current two Delta petrol retailers in Montserrat are A&F Service Station in Sweeney’s and Osborne Petrol Station in St Peter’s.

As at Friday, May 26, 2016, the current prices for fuel inclusive of the new Retailers Margin are:

Gasoline:                         Diesel:

Duty Free $8.36              $6.96

Wholesale $10.66            $8.00

Retail $11.41                   $8.75

These prices remain lower than the lowest prices of 2014 which was $13.79 per gallon for gasoline and $12.99 per gallon for diesel. It is further noted that this increase in retailers’ margin would not affect the price at which Montserrat Utilities Ltd (MUL) purchases its diesel for electricity generation. MUL purchases diesel from Delta on a different pricing arrangement.

Certain GoM premises (Govt. HQs etc.) will continue to purchase duty free fuel from Delta. In the meantime, a new 6,000 gallon tank has been proposed to be erected at the Delta Bulk Station at Carr’s Bay. This tank is to offer a new Ultra Low Sulphur Diesel for use by Public Works and certain vehicles that perform at their optimum with this type of fuel.”