Over the last two weeks, this column presented the facts on the financial condition of the Barbados National Oil Company Limited (BNOCL).
Minister Sinckler was wrong in suggesting that the company was bankrupt; Barbadians were made to pay excessive prices for gasoline, diesel and electricity; and the pricing mechanism introduced in November 2008 should be investigated by the Fair Trading Commission (FTC).
To justify the predatory pricing of BNOCL since 2008, the minister gave the impression the last Government had left the company in huge debt.
When the comments were made, Sinckler ought to have known that BNOCL realized a profit of almost $50 million in 2009/10 and is on course to surpass this figure for the following year.
Last week, it was demonstrated that the company sold a barrel of refined petroleum product for $30 more than it was purchased. This happened at a time when consumers were and are still complaining about the price of gasoline and diesel. Rather than be sympathetic to the widespread burden of the consumer, Sinckler imposed additional VAT on these products.
And in the ten-month period between November 2010 and August 2011, two equally harsh budgets were presented to the people. Only this week, it was admitted that the Government borrowed heavily from both the National Insurance Scheme (NIS) and the Central Bank.
These policies all support the now accepted view that Government engaged in excessive spending since 2008 and so the fiscal crisis is self-imposed. It is also accepted that only artificial means can be used to address the crisis as it would be suicidal for Government to do what is right – put the country before party.
It is noteworthy that whenever the truth is told about the issues confronting the economy, the stance of the Government is to delay reaction for about two months, by which time the people are supposed to forget. If the issues are esoteric such as the foreign reserves, length of stay and the fiscal deficit, it is easy to forget.
But when the issues are about cutting workers’ allowances, rising gasoline, diesel and electricity prices, which are not esoteric, it is easy to remember.
Furthermore, it is impossible to forget that jobs number one, two and three were reducing the cost of living. Fruits and vegetables were to come from Dominica; a Government-owned supermarket was to be established and Cost-U-Less was to come to make Barbadians pay less.
An economy is managed by ideas and all governments must understand the importance of energy pricing. From the inception, this administration was warned about the importance of pricing energy products correctly.
Failure to do so over the last three years would have done significant damage to households, but more so businesses. Once businesses were forced to pay higher prices, especially for diesel, they simply passed on the burden to the consumers. But the consumers’ spending power was already cut by: rising food prices, rising water and electricity bills and rising living costs in general.
Imagine these burdens on a fixed income that has not changed over the same period.
There is no good reason based on the facts why BNOCL had to turn around its lack of profit in one year. It was truly poor policy on the part of the Government. Unfortunately, the poor policy continues!
Just like the NIS, BNOCL belongs to the people. Therefore, there is nothing wrong with easing the burden on Barbadians at the expense of BNOCL’s bottom line. Of course, a time must come to reverse the losses but it must be done with prudence.
Some egos are fuelled by big bottom lines, but the Government has to know when to jettison such egos. Knowing when is about providing leadership after receiving the best advice.
A subsidy would have gone a long way without compromising the company’s financial integrity!
Â
Clyde Mascoll is an economist and Opposition Barbados Labour Party spokesman on the economy. Email clydemascoll@gmail.com.
Â
Â
