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Is Local Butane Monopoly Really Local?

August 30
22:18 2019

Among several motions passed in the last sitting of the House of Representatives, a controversial bill to establish a new national butane company was introduced, causing many in civil society and the private sector to issue harsh criticism on the decision and question the circumstances of the new company. And while the bill essentially creates a monopoly, giving the new national company full control over the Liquid Petroleum Gas (LPG) industry, many including the Prime Minister have touted it as a locally owned monopoly – but sources indicate that an American company will control the majority of shares.

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A breakdown shared with the Reporter lists the company’s principals showing an American company with a controlling 39 percent stake in the company with the second largest shareholder being GOB with 25 percent and other smaller Belizean shareholders.

In a release following the bill, the Belize Business Bureau (BBB) called the move regressive, saying it places a monopoly tax on the poor, and claiming it will increase inequality, create job losses and further unemployment – “…what was needed was a competition law to allow for more distributors, stronger standards and regulatory penalties for price gouging,” the BBB said. The new company replaces current Mexican suppliers, which have maintained a similar monopolized control over the industry over past years. The new company has been granted a 15 year license and is a partnership between government and several well-known business persons, and an American company.

Business Senator Mark Lizarraga told the media this week that while the bill was recently tabled, the move toward the company has been in motion for quite some time with the company investing as much as $24 million already in setting up. He noted that the company was still trying to raise capital but said the numbers should have been brought to the House and to the Senate sooner for debate. He did acknowledge that the new formula would create some additional income stream for the bureau of standards and said that should help to strengthen surveillance to ensure consumers are getting value for money.
The BBB has called the move the worst idea this past decade, adding that since the Minister has direct control over who gets a license, “this policy is a seed bed for corrupt practices.”

Public Service Union (PSU) President Gerald Henry also told the Reporter the union is concerned about the newly established company and the level of control it has over the industry. Henry said the union is concerned that creating another monopoly will put consumers at the mercy of the company’s principals with no other competition to maintain fair and balanced pricing. Henry said union members have voiced their concern and are calling on GOB to carefully consider the move.

Prime Minister Dean Barrow, however, in introducing the bill claimed that GOB would maintain its authority and “control what’s happening with pricing.” Barrow explained that the bill is meant to fix situations in which consumers are held hostage by the price point demands of those in control of the industry. Barrow further added “…if you want to get political, it is controlled by principals, huge personalities of the People’s United Party. We have looked well past color because we think it is in the national interest, in the interest of the consumer.”

The listed directors of the company include Financial Secretary Joseph Waight, Gilbert Canton, Brad Freking, Marion Usher and Michael Bowen. During the reading of the bill, Barrow made his case that the national company is a better alternative than the current makeup of the industry in which all the suppliers in Belize are part of a Mexican family that controls the industry’s interests. “Absolutely with this National Gas Company you will see a lowering of prices to the consumer,” Barrow claimed.

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