Competition coming to Cayman’s propane industry

If all goes as planned, Grand Cayman’s propane fuel supplier that has enjoyed a monopoly for more than a half century will have competition by the end of this year.

Clean Gas Ltd. announced last week that it had submitted a planning application for a bulk storage facility capable of holding up to 300,000 gallons of propane fuel in Grand Cayman’s Industrial Park, off Sparkys Drive.

The initial investors of the company include businessmen Randy Merren and Marcus Cumber, attorney James Bergstrom and Minister of Financial Services Wayne Panton.

“For us, it’s about giving a choice to consumers in the Cayman Islands,” Mr. Cumber said, adding that while starting a business in competition with the long-established sole provider of propane carries some risk, it was a risk he and his partners were willing to take.

“We have four like-minded Caymanians that see an opportunity in this particular market,” he said. “We felt that with the growth of [Cayman’s] economy that there was room for a new provider to enter the market. There’s a risk we might get kicked … but from a redundancy standpoint, it’s good to have competition.”

Mr. Cumber said that although Home Gas – the current sole supplier of propane on Grand Cayman – will have a competitive advantage because the direct underground pipeline between the Sol Petroleum terminal on South Church Street and its facility on Walkers Road eliminates transportation costs, there is still enough profit margin to supply propane at a lower price. This, he believes, will have positive effects for Grand Cayman’s businesses and public.

“When we saw Digicel enter the market against Cable & Wireless, telecom prices dropped significantly, and they’re still dropping,” he said, adding that the same thing will happen with propane fuel. “You will see that before we even open our doors prices will come down.”

Clean Gas will service residential, industrial and commercial accounts, and perhaps even the small tanks provided at gasoline stations, Mr. Cumber said. It will not, however, enter the propane appliance market. “We just want to be a supplier and we just want to bring the price down,” he said.

Because propane burns cleaner with less carbon emissions than other fuels, if it is made more affordable, Mr. Cumber said he believes more people would “go green” and use propane appliances and maybe even vehicles.

Assuming planning approval is granted, Mr. Cumber said the build-out of the headquarters and storage facility would be fairly simple, allowing for a fast start up before the end of the year. He said Clean Gas has already lined-up its distribution supplier in the United States.

Mr. Cumber also said it was estimated that Clean Gas would employ seven direct jobs on Grand Cayman, positions that he is confident Caymanians can fill.

“Clean Gas aims to establish a positive, lasting relationship with our community,” he said. “Up until now, there’s only been one provider serving the community. Now, consumers will reap the rewards of being able to choose between the two options in the market.”

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5 COMMENTS

  1. Given the island’s Finance Minister is a partnet in the venture, the granting of planning approval is likely certain. Good luck to the partnership. This will be an interesting test to see how easily the business is set up and comes online.

    Of course competition is always beneficial to the consumer, especially when a new competetor claims there is still reasonable provit when operating without a significant benefit such as a low cost distribution system.

    Often with new competition, existing businesses look inward to determine if there are new ways to become more efficient, customer friendly and overall a more efficiently managed company. Perhaps we shall see some of those changes in the case of our current provider. Perhaps not. Perhaps there will be massive changes to efficiencies, profits, stregthening of the distribution system and overall benefit to the consumer. Only the market, and time will tell.

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  2. There’s one potential customer for propane not mentioned here – CUC. In recent years (certainly since 2007) all CUC’s new generators have been multi-fuel, which means they can be run on a variety of fuels including propane. The switch from diesel to propane would make electricity production cleaner and should reduce costs. It’s a long-overdue move.

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  3. I would believe it when I see it . The one that really needs to have competition in this matter is not getting it for this to be really beneficial to the consumer.
    CUC would not pass those saving on to the consumer , just like what they do when the price fuels drop . Do the consumer get a drop in their electric bills ? Do we get cheap gasoline on the Island because there are so many gas stations in competition ?

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  4. I am sorry to say but I don’t think that the government has the consumer in mind in these matters, for 2 suppliers to make any benefit to consumers.
    That’s why you don’t have low prices in gasoline on the Island , because there are too many politicians that are owners of gas stations.

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  5. Amen on those comments Ron, and if the politicians are not the owners then their political friends are.
    Anyway, lets watch and wait, and see if this is not just another political propaganda soliciting 2017 votes.

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