THE STATE-OWNED Barbados National Energy Company Limited (BNECL) endured significant financial challenges during the last financial year, as volatile global oil prices forced it to absorb losses while the Government shielded consumers from steep increases at the pump.
Minister of Finance Ryan Straughn informed the House of Assembly on Monday that the company, formerly the Barbados National Oil Company, was compelled to purchase petroleum products at elevated international prices while selling them locally at controlled rates designed to ease the cost-of-living burden on Barbadians.
He was delivering the 2026 Budgetary Proposals and Financial Statement.
The situation, he said, emerged after a period of major swings in global fuel prices and rising import costs for Barbados, which relies heavily on imported energy.
The economist noted that in 2019 Barbados spent $728 million on fuel imports, a figure that dropped to $519 million during COVID-19 in 2020 before rising sharply again in subsequent years.
By 2022, the fuel import bill had surged to $1.12 billion, nearly $400 million higher than in 2019, reflecting the global energy crisis that followed the pandemic and geopolitical tensions. Import costs remained elevated at $1.01 billion in 2023 and $951.7 million in 2024 before falling to $728.5 million last year.
Straughn explained that allowing domestic fuel prices to rise in line with the international market in 2022 could have further destabilised the national economy as households and businesses were still recovering from the pandemic.
Several measures Instead, he noted, Government implemented several measures to limit the impact on consumers. Among them was a cap on the amount of Value Added Tax (VAT) collected on fuel, restricting VAT on gasoline to $0.47 per litre and $0.37 per litre on diesel by pegging the tax calculation to an international oil price of US$80 per barrel.
VAT on electricity bills was also reduced from 17.5 per cent to 7.5 per cent, while freight rates used to calculate customs duties were capped at 2019 levels to prevent surging shipping costs from pushing up the price of imported goods.
“While these interventions protected households and businesses, they meant the national energy company was effectively selling fuel below its purchase price during the most volatile periods of the market. As a result, the company accumulated operating losses over several years,” the Christ Church East Central Member of Parliament revealed.
To address the shortfall, Government introduced a $0.09 per litre recovery fee designed to allow the energy company to recoup those losses over a four-year period.
Straughn said that although fuel prices declined sharply in 2025, the cumulative losses from the previous three years were still being recovered and could continue for at least another year if current conditions persist. (BA)