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Global developments in North Africa and the Middle East are increasing the utility rates and cost of living at an alarming pace. The SHTA and the SMTA are requesting that Government approve the new rate structure for GEBE sooner rather than later and that GEBE management immediately adjust the factor in the fuel clause to prevent undue economic hardships.
While we recognize the gravity of recent events, the SHTA wants to remind the population and government that the core issue is and always has been the proper functioning of the economy. The effects of the global recession now coupled with the crisis in the Middle East will further exasperate the situation locally. The SMTA adds that the effect of rapidly rising utility rates on resorts and guesthouses will have severe impacts on operations budgets, threatening the viability of many properties and particularly that of timeshare operations.
GEBE makes its budgets based on the expected fuel price. Unfortunately this system puts the company in a very vulnerable position making its revenues very dependent on the volatile price of oil. High spikes in prices result in additional revenues and profits, but drops in prices results in lower than expected revenues that barely cover costs. Two years ago when oil dropped to $40 a barrel GEBE increased the factor used to compute the fuel clause charges and has not changed this as oil hovers near $100. Relief is needed now; not after more damage has occurred.
A tariff study done by KEMA was submitted and presented to government in 2010 but has yet to be approved. The proposed new tariff structure would update the base rate for electricity to cover the actual cost of producing and distributing electricity, and the fuel clause would be updated to be only a pass through based on the price of fuel. Fluctuations in the oil price would not have such a large effect on the cost of electricity.
Reiterating the statement made by Minister Meyers, the SHTA is concerned about the impact the revolt in Egypt (and now Libya) will have on Global oil prices and consequently on our utility rates.
Regards,
Valya Pantophlet
Executive Director St. Maarten Hospitality & Trade Association