Falklands : PUBLIC MEETING REPORT FOR TUESDAY, 26 APRIL 2011 (Part 1)
Submitted by Falkland Islands News Network (Juanita Brock) 26.04.2011 (Article Archived on 13.05.2011)
A public meeting took place in the Court and Assembly Chamber of the Town Hall at 1700hrs on Tuesday, 26 April 2011. Present were Assembly Members Emma Edwards (Chair), Roger Edwards, Bill Luxton, Jan Cheek and Dick Sawle.
PUBLIC MEETING REPORT FOR TUESDAY, 26 APRIL 2011
(Part 1: Written Question from Roger Spink)
By J. Brock (FINN)
A public meeting took place in the Court and Assembly Chamber of the Town Hall at 1700hrs on Tuesday, 26 April 2011. Present were Assembly Members Emma Edwards (Chair), Roger Edwards, Bill Luxton, Jan Cheek and Dick Sawle.
The meeting began with two written questions. The first, rather lengthy question about Stanley Services was sent in by Roger Spink and the second shorter one, about severance pay for super heads was submitted by Ruth Taylor. Due to the complicated nature of Mr Spink’s question, it and the answer will be transcribed.
As Read by Emma Edwards:
Given the vital importance of the Falklands’ oil and fishing industries, with supply of bunkers to vessels, can FIG as regulators and major shareholders in the monopoly as supplier advise what performance conditions with regards the supply have been set; do councillors believe further conditions should be introduced; what monitoring performance is done; and do councillors believe better monitoring of performance should be introduced?
The Answer was provided by FIG (Andrew Lee):
To the first part, overall FIG clearly recognises the key importance of the supply of bunkers to vessels and for this reason, has a number of mechanisms in place. It is also planning, in the near future, to review the current arrangements with a view to determining if current regulatory mechanisms are appropriate.
The specific answers to the four questions are asked on what performance conditions with regards to supply have been set: Stanley Services Limited has exclusivity in the importation, marketing and supply of fuel; not including MOD or its contractors, within the Falkland Islands and territorial waters. This exclusivity is given by a licence as granted by FIG to Stanley Services Limited under the Petroleum Products Ordinance. Grant of the licence to Stanley Services Limited was on the basis that Stanley Services enter into a fuel supply agreement.
The fuel supply agreement requires Stanley Services to sell to fishing vessels licensed by FIG to fish in the FICS and FOCS, to sell any persons licensed by FIG to explore for natural mineral resources in the Falkland Islands or the continental shelf. Within its obligations are to procure fuel supplies, make fuel available for purchase by FIG, commerce and industry including fishing, private consumers, supply reasonable needs within the territory – territory includes territorial waters, maintain stocks of bunker fuel for use within the territory and not to sell bunker fuels at a price exceeding the maximum sale price.
In turn Stanley Services Limited close down its obligations to Stanley Bunkers Limited via a bunkering sub-contract agreement so that the secure of sufficient supply of bunker fuel to meet demand all year round yet maintain stocks of bunker fuel for use by vessels including fishing vessels in the territory, FICS, FOCS and in the South Atlantic; it does not sell bunker fuels at a price exceeding the maximum sale price.
In terms of performance against these obligations, whilst there may be occasions whereby it is challenging to assure that all reasonable bunker fuel demands are met, current levels of performance are considered to be good; and in instances where operational challenges have arisen in the supply line, Stanley Services Limited reacts professionally and responsibly to ensure that these are resolved as quickly as possible.
EE: That’s the answer to the first bit. Are there any questions coming from that?
After clarifying that some of the answers Mr Spink wanted were in another part of the answer not yet read out, the questions continued.
EE: The second part was: Do Councillors believe that further conditions should be introduced – I think that is a part for Councillors, really, to answer. I have a short statement.
FIG Answer Continues:
This is for Councillors to say, however, I would suggest that when FIG has the capacity to undertake a review of current arrangements, it would be prudent to ensure that current conditions are being satisfactorily met and would consider other practical options which might lead to continued effective control of both supply and price.
DS: I wouldn’t mind commenting here. With any regulated supplier, regulation is important whether it’s Cable & Wireless or Stanley Services. Regulations are absolutely vital and prudent in both those
RE: I don’t think we have sufficient regulation in place and I do think that we should go further and insist that the fuel supply also considers price and quality of fuel. It’s supposed to maintain an availability of fuel but we don’t seem to have any come back on Stanley Services if fuel is not available. And we’ve seen cases recently where fishing vessels have been limited and actually been told they can have only have half of what they want. I think limiting the amount of fuel you can get is wrong and if the monopoly supplier can’t supply then I think there should be come back on that monopoly supplier, so I think there is a long way to go with regulation and control over Stanley Services.
JC: it’s not a new problem. For many years, supplies have not necessarily been available; and people don’t ask for them tomorrow. They usually give in a couple of days’ notice. As Roger (Edwards) rightly says, sometimes only part of the requirement is supplied. And this can be a problem for a vessel that can’t fish for a bit longer. They will have to stop fishing and perhaps wait around while someone else is being refuelled. It’s far from an ideal situation but that’s part driven by our remoteness.
EE: I will move on then to Section 3 of your question – What monitoring of performance in Stanley Services:
FIG Answer:
There is a process to manage and regulate the maximum sale price. Validation that Stanley Services are compliant with this obligation resides with FIG. However, there is no performance monitoring in the strictest sense. Supply shortage issues arising are dealt with as they arise and are required to be resolved as soon as practically possible. The licence obligations are legally binding and should Stanley Services Limited be found to be deficient in relation to these obligations then corrective actions is and would be taken including (if the arrangements were to be unsatisfactory) a withdrawal of the licence.
EE: Does that answer (your question)
Roger Spink: I think if you haven’t been monitoring, how do you know when you actually have to withdraw the licence?
DS: There is regular monitoring of the maximum sale price and there is also regular monitoring of the domestic fuel formula as well.
Roger Spink: There is no regular monitoring of stock levels or..
DS: There is monitoring of stock levels as well on domestic stocks. On the bunker stocks, that is something which I think could be improved. Just at the moment there are enormous problems world-wide getting fuel; for example, I think it was last week or maybe 10 days ago there was no fuel at all in Rio Grande. It just wasn’t available, so our fuel availability here is actually a plus point. I admit there were problems in the past and there are still problems. It could be regulated better and how you monitor that performance is something we need to look at and see if it is part of the regulations.
Roger Spink: World-wide supply issues are something easy to hide behind if you have a monopoly but if it was an open market there would be competition and it would drive people to bring in adequate stocks.
DS: But in Rio Grande there wasn’t any fuel; so if you wanted fuel you couldn’t get it. You could actually get it here but not there. So it is a positive effect for the Falklands, I think.
Lidda Luxton: One of the problems must be assessing demand, isn’t it? We haven’t got a lot of ships around at the moment but presumably it’s a business and they don’t want to have a lot of fuel sitting around and not being used
DS: That’s true but there are two sides to the fuel supply. There is the domestic supply which is fairly easy to predict and that is catered for. I think that is fairly well regulated as for supply levels and so on. When you are looking at bunker supplies for fishing vessels, will often require fuel, not because they have run out like a car runs out of fuel. They require fuel for other reasons. The catch has increased and vessels need to come into tranship and they will want fuel to replace the fish they are transhipping. So demand in the fishing industry can change quite quickly. Meeting that demand, for want of a better word, can be challenging. And sometimes it is the case that fishing vessels don’t get what they request. But as far as I am aware, no fishing vessel has actually had to stop operations this last season because of lack of fuel, which is better than having no fuel available like it has happened in other ports.
RE: I think there is a case for vessels being delayed because they have been waiting for several days.
DS: I haven’t heard of any but
RE: and the answer actually states that licence obligations are legally binding but in all the time we have had Stanley Services with quality problems and supply problems, we never actually (monitored this) so I actually believe that Stanley Services must be the next monopoly situation that we seriously look at for legislation, compliance and so on.
DS: I don’t disagree with that but all I am trying to say, I suppose, is that as far as those agreements are concerned, there has been no breach of those agreements and there is actually nothing FIG can do. The question is whether or not those agreements have been breached and to date I don’t think anything has been breached.
JC: As there is no systematic monitoring, we have all this second-hand reporting of delayed fuel and lack of fuel but there is no routine monitoring of fuel and perhaps that is what should be in place.
Roger Spink: I would also point out that Government is also the major shareholder in Stanley Services at 45%
DS: I should declare, sorry, I am a director of Stanley Services Limited.
EE: The final part of this question is: Do Councillors believe that better monitoring should be introduced?
FIG Answer:
This is for Councillors to say but I would say that provided FIG’s sufficient capacity would be sensible to monitor more closely. Actual performance will be in relation to how well Stanley Services is meeting its obligation for fuel supplies and to maintain stocks. Question of further conditions in performance might be best addressed as part of an overall review of Stanley Services Limited arrangements and the granting of future licences. The current arrangements expire in 2016.
Brian Summers said he knew that one time Government wanted to sell off their 45% share in Stanley Services. Councillors agreed that this seemed to fizzle out. The proposal, however, was that people would buy shares in a holding company – not Stanley Services. There were benefits for having Councillors on the board but this could be revisited.
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