24 June 2022
Following the recent wholesale price adjustment from the Bulk Fuel Installation (BFI) for diesel and petrol, St Helena Government (SHG) takes this opportunity to provide information on how wholesale fuel prices are determined and adjusted on St Helena.
The Bulk Fuel Installation is owned by SHG and is a separate trading activity of the Government that is managed and operated on SHG’s behalf by Solomon & Company (St Helena) PLC under a service contract. Solomon & Company makes the necessary arrangements for the procurement of fuel but ownership of the stock remains with the BFI.
The wholesale price of fuel sold by the BFI is determined by a Pricing Model agreed by Executive Council that prices diesel and petrol separately. The model takes the landed cost of fuel which includes the purchase price, the cost of freight, import duty and other costs associated with the procurement of the fuel, and adds a fixed mark-up per litre that is used to cover the operational and capital costs of operating the BFI. These costs include employee costs, on-Island fuel distribution, repairs and maintenance and management and administration. An adjustment is then applied to this price to take account of existing fuel stocks and this results in the wholesale price at which fuel is sold from the BFI to wholesale customers. Therefore the wholesale price includes all costs associated with bringing fuel to the Island as well the management and distribution of the fuel.
The retail price that the public pays at the Fuel Stations is determined separately. Solomon & Company purchases their fuel for retail sale to the public from the BFI at the wholesale price as with any other wholesale customer, and they are allowed to apply a retail mark-up under their service contract with St Helena Government for the fuel sold.
The timing of wholesale price adjustments from the BFI is determined by the date of delivery of the fuel shipment. The final costing for the fuel shipment is received within a few weeks after the fuel shipment and it is at this point that the wholesale price is adjusted. The wholesale price adjustment made this week relates to the most recent fuel shipment that arrived in May 2022, whereas the wholesale price adjustment made in May 2022 related to the previous shipment. The fuel stock adjustment built into the Pricing Model takes account of this timing difference between the date of the fuel shipment and the date of the wholesale price adjustment.
24 June 2022