The Cayman Islands may eventually enact control over petrol prices, but only if the government finds no evidence of competition in the market, Planning Minister Kurt Tibbetts said Monday.
The Progressives-led government introduced the Fuel Market Regulations Bill during Legislative Assembly debate Monday as part of an effort to combine the regulation of public sector utilities and commodities under the newly formed Utility Regulation and Competition Office. Cayman’s water, electricity, telecommunications and fuel sectors are planned to be regulated under that office, once all the relevant legislation is approved.
For the fuel sector, which Cayman’s government has threatened with greater regulation for about a decade, Mr. Tibbetts said there would be “momentous change.”
The utility regulatory office will be given “significant market power” under the provisions of the bill to determine whether competition among distributors and retailers “truly exists in the fuel market.” If the market is not determined to be competitive, the regulator is authorized to ensure there is “suitable competition,” Mr. Tibbetts said.
“If these measures fail, then the next step, in consultation with Cabinet, will be outright market price regulation,” the minister said. “These various steps … must be taken before taking the nuclear option. That option will be used when it is determined … that collusion is taking place.”
Independent opposition MLA Arden McLean said the government appeared to be dancing around the real issue for most of Cayman’s residents: control of fuel costs.
“This bill fall[s] way short of that,” he said.
“[It says that] at some stage we can go to the nuclear option, which is price control,” Mr. McLean continued. “The time has come for that nuclear option.
“The gas stations are anywhere within two, three cents difference in prices. If that’s not collusion, I don’t know what is … whether they sit down and do it or they wait until one puts their price up and they match it. It is my view that the cost of fuel in this country is an absolute, downright rip-off.”
Mr. Tibbetts acknowledged that the process for establishing price controls under the legislation could be “lengthy.”
The government approved separate laws last year that give the new regulator power to inspect local distributors’ and retailers’ prices, but the law does not allow those to be publicly released. Rather, the information on pricing is used to inform government officials an other decisions involving the competitive environment.
Mr. Tibbetts said the government did not necessarily wish to move to a price-controlled environment for fuel right away, but rather sought to establish a “sustainable framework” for regulating the fuel market and also for the service providers.