MINISTER SINCKLER is at it again!
In the financial overview of the annual report of the Barbados National Oil Company Limited (BNOC) for the financial year ending March 31, 2010, it is mentioned on no less than three occasions that the subsidization of petroleum products and electricity on behalf of the Government was responsible for the big losses realized for the years 2008 and 2009.
“In October 2008, the Government removed the subsidies and implemented a pricing mechanism to allow the company [to] recoup the losses incurred.” Indeed, the company realized profits of $48.54 million for the financial year ending March 31, 2010, and is expected to make in the region of $60 million for the year ending March 31, 2011.
Barbadians were punished to turn around the financial condition of BNOC in one year! Why?
Lack of understanding!
From a policy perspective, the figures of BNOC are particularly interesting.
In response to a suggestion to help the hurting public with respect to high oil prices and galloping electricity bills, Minister Sinckler gave the impression that BNOC had incurred losses
of $250 million under the last administration in his Budget Speech.
The last administration would certainly have to take the blame for the loss up to March 2008 and the losses for the first six months in the following financial year, notwithstanding that the current administration took ten months to change the policy. In being generous to the Minister of Finance, my argument is strengthened.
Therefore, according to the figures in BNOC’s annual report, $94 million may be attributed to the policies of the Owen Arthur administration. This is a far cry from the $250 million suggested in the Budget. But Minister Sinckler is prone to exaggeration!
In addition, please note the following statement in the annual report of the Barbados Light & Power for 2008: “Residential customers, however, were cushioned from the full impact of the increase through a Government subsidy on fuel oil used in the production of electricity for these customers.
“The subsidy, which was introduced in December 2007, held the Fuel Clause Adjustment at 23.5375 cents per kilowatt-hour and cost the Government some $36 million up to the time it was discontinued in November 2008 when the Fuel Clause Adjustment fell below the subsidized level as international prices eased.”
This is the same subsidy to which the BNOC annual report refers. So we now know that the subsidization of petroleum products cost the Government $58 million over an 18-month period; that is just over $3 million per month.
Given that the BNOC’s annual report was signed on December 7, 2010, the Cabinet and certainly Minister Sinckler would have known that the company raked in huge profits and was expected to do even better this year and next year.
Yet the impression was conveyed by the minister that the company was in financial hell and it was impossible to even consider relief for the public from the gruelling increases in prices.
The truth is now out!
The Minister of Finance is clearly out of his depth. He ought to have known that the figures which he quoted in the Budget were wrong. He ought to have known that Barbadians were and are still genuinely hurting from rising oil and electricity prices.
He ought to have known, at the time of his first Budget in November, 2010, that the imposition of a 17.5 per cent value added tax on gasoline prices and electricity bills was disingenuous.
A pattern of behaviour has emerged which makes it easy to wait on the minister and do some research to simply prove him wrong. His desire to impress has now vastly exceeded his capacity to deliver substance.
So far, in his short tenure as Minister of Finance, Sinckler has had to reverse himself on no less than five occasions. This reversal, if forthcoming, should be accompanied by an apology.
By the way, Press conferences ought to shed light, not add darkness. Furthermore they are to inform, not entertain. But they are being used to compete.
Some in our midst seem to think this is good politics and it is being encouraged.
There is a much bigger game in town which needs framing. It has to do with understanding how to prevent the Barbados economy from going under.
Clyde Mascoll is an economist and Opposition Barbados Labour Party spokesman on the economy. Email [email protected]
