The Cayman Islands will only implement direct price controls over petroleum suppliers as “a last resort,” outgoing Planning Minister Kurt Tibbetts said in a statement released Tuesday.
Mr. Tibbetts told the Legislative Assembly earlier that the government may eventually enact controls over fuel prices only if the public utilities regulator, OfReg, determines that competition in the Cayman Islands market has failed.
“Price control in relation to fuel prices in the Cayman Islands is not the primary objective of the government or of this law,” Mr. Tibbetts said. “Rather than price controls, the regulatory approach will be one where we will monitor and oversee the [fuel] sector based on established key metrics and parameters. If these are on target, we do nothing.”
It is only in situations where targets “deviate” from what is expected that the regulator will step in to “introduce compensatory measures to bring prices back on track.”
“Leaving the market to itself is not an option at this time,” Mr. Tibbetts said.
The Progressives-led government introduced and passed the Fuel Market Regulations Bill during March’s Legislative Assembly meeting. The bill is part of an effort to combine the regulation of public sector utilities and commodities under the newly formed Utility Regulation and Competition Office, now called OfReg. Cayman’s water, electricity, telecommunications and fuel sectors are planned to be regulated under that office once all the relevant legislation is approved.
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.
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 on 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.