General — 21 March 2014 — by Adele Ramos
GOB looks at revamping butane sector

At an exorbitant high of $128 for a 100-pound cylinder, the prices for liquefied petroleum gas (LPG) have consistently been escalating in the country, but the Government of Belize is negotiating with Mexican officials for a concessionary arrangement that it said could ensure quality supply at a stable and more affordable price.

The national demand for LPG, a mixture of butane and propane, is 1.2 mil gallons per annum, said Jose E. Trejo, Director of the Belize Bureau of Standards.

Trejo said that although Belize’s energy policy pushes for more renewable energy and higher efficiency, the country has to establish a balance between renewable and non-renewable energy sources, such as LPG and LNP, so as to meet the local demand.

He told Amandala today that the Government of Belize has been in talks with Mexican officials, as part of a bi-national initiative, similar to the PetroCaribe model under which the Government imports fuel under concessionary financing terms from Venezuela. Payment terms have not yet been disclosed.

“Whether the market price goes up or goes down, we want to ensure that [what] …we purchase is to some extent stable,” Trejo explained.

Trejo said that the intention is to establish a government-to-government arrangement. One way of implementing that new arrangement would be via a joint venture between a private enterprise in Belize and Pemex, a leading company in Mexico.

“We are excited about this, Mexico itself, with the change in Government. And they made it clear that they are going through a lot of energy reform. They certainly see the importance of establishing this relationship with Belize,” Trejo said.

He said that a bi-national ad hoc committee will work closely with them to develop a timeline and a specific plan of action and related activities.

The target date for implementation is 2015. Trejo said that the change should be implemented within 18 months, maximum.

The bulk of Belize’s LPG supply comes from Central America. Only 23% comes from Pemex in Mexico, Trejo informed.

He spoke of the need for a new legislative framework that would address marketing, supply and distribution, as well as prices.

Currently, the Belize Bureau of Standards uses the Mont Belvieu Index, which reflects prices out of Houston, Texas, to calculate the regulated price of LPG in Belize.

Trejo said that the impending reform will entail the development of a new pricing formula – which means that local LPG prices would no longer be calculated based on the world market index. Mexico’s pricing formula will be used as a model.

Minister of Trade, Investment Promotion, Private Sector Development and Consumer Protection, Erwin Contreras, traveled to Mexico City with his CEO, Michael Singh, and Trejo earlier this month.

In the presentation the Belize contingent made to Mexican officials when they met in Mexico City on Tuesday, March 4, 2014, Belize outlined the urgent needs: (1) technical assistance agenda in the pricing, marketing, and regulation of LPG in Belize; (2) a proposed TA agenda in other technical areas including metrology, standardization, conformity assessment and consumer protection; (3) economic cooperation – sole supplier of LPG (agreement between Belize- Mexico government); and (4) the logistical framework.

Trejo said that the next step is for committees to be set up to start working on finalizing the cooperation, specifically for LPG and LNG, which will fall under the umbrella agreement Belize and Mexico established some years ago.

The reform will necessitate dialogue with the LPG importers, which include Belize Western Energy Limited (BWEL), Gas Tomza, Zeta Gas, Belize Natural Energy (which imports a small amount to complement local production), and two family-owned enterprises– Belize Gas and Western Gas, Trejo said.

He told us that the Government of Belize also wants to explore the possibility of using other derivatives. The wider use of LNG is one that they want to explore for the industrial and commercial sector. Trejo said that in places like Panama, the demand for LNP for manufacturing and even for motor vehicles is growing, and buyers can simply drive up to a station to purchase the fuel.

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