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Tropigas wins injunction against gas price decrease

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PHILIPSBURG--Tropigas SXM N.V. on Thursday won the injunction filed against the decision of the Minister of Tourism, Economic Affairs, Traffic and Telecommunication and Country St. Maarten to decrease the prices for Liquefied Petroleum Gas (LPG) by approximately fifty per cent.

The Judge in the Court of First Instance ordered Government to repeal its decision of February 19 to decrease the maximum prices for 20 pound cylinders of LPG from NAf. 42 to NAf. 21.73, for 100 pound cylinders from NAf. 153 to NAf. 112.96 and for bulk loads from NAf 1.51 per pound to NAf. 0.97.

The price adjustments were announced in the local newspapers. Government stated that “due to ongoing developments at an international level the prices of crude oil experienced adjustments,” therefore the local prices for cooking gas were also adjusted.

In a WhatsApp message Minister of Tourism Ingrid Arrindell confirmed to Tropigas shareholders that the reduction was “huge,” but the Economic Affairs Department had stated there had been no price reduction for LPG “for a while now” and had therefore, recommended the considerable decrease. “The decrease is justified in my opinion, but it is drastic,” Minister Arrindell stated.

She confirmed that the advice to reduce the price for LPG was not made in consultation with the suppliers as well as with the Council of Ministers, which did not have the opportunity to peruse the advice.

“It was done hastily and forwarded to Minister [of Public Health, Social Development and Labour Emil –Ed.] Lee to sign off and to be published due to my absence,” Minister Arrindell stated. “I sincerely believe that the decrease is in the general interest of the public,” she said. However, the suppliers should be given time to adjust their prices,” it was added.

Arrindell called this situation “very unfortunate,” as the suppliers nor the Cabinet were consulted “or even informed beforehand,” and did not have the opportunity to give any advice or input.

Minister Arrindell confirmed that the new price decree would have a negative impact on the revenues of suppliers as they would be incurring a loss. In addition to that the reduction was also not considered uniform, as it is now significantly cheaper to buy five units of LPG rather than one unit of 100 pound.

As suppliers ceased the sale of LPG gas because they were unable to sell at the new price because they were incurring a loss, the Minister advised to retract the decree until an in-depth study had been done with the input of suppliers and awaiting recommendations by Government Accountants Bureau SOAB.

During a meeting with civil servants of the Ministry of Economic Affairs on February 22, the four companies selling LPG in St. Maarten requested the new pricing structure to be suspended, or to allow for a price increase of at least 25 per cent of the new price levels.

In the injunction, the Court established that Government did not have full insight in the cost structure of LPG suppliers on St. Maarten. “This means that Government has lowered the prices without taking into account what the 50 per cent price reduction would have on LPG suppliers and especially for those who are only selling LPG cooking gas," the Court stated.

It was established that Government had made hasty decision and had failed to consult with suppliers.

Despite information that Minister Arrindell had the intention to retract the decision this had not been materialized. Government referred to the SOAB report in this respect, but the Judge said it was "unmistakenly" ascertained that Government had not taken any action to force the gas suppliers to provide information to SOAB.

According to Tropigas it is incurring a loss of US $15,450 per month. It claims its competitors, among which SOL Antilles NV, are using the price reduction to push Tropigas out of the market. The Judge ordered the Minister to repeal the decision to adjust the LPG prices and to cease inspections by the Control Unit until the Minister has set new prices based on SOAB report. In case of non-compliance Government has to pay a daily fine of US $2,000 with a maximum of US $200,000. Government was ordered to pay a US$100,000 deposit and pay the legal cost, estimated at Naf.2,843.


Article - Courtesy of The Daily Herald

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