Is Fuel Clause rephrasing gross mismanagement?

Terence Jandroep CRA CQA CLA


Communities of the Dutch Caribbean are consistently complaining about the utility bills and therefore a simplified explanation is necessary. Colombian educated Certified Risk Analyst Terence Jandroep illustrates the utility bills using layman terms after conducting a historical research:

The operating costs of the GEBE (SXM), WEB (Aruba, Bonaire) STUCO (Statia), SEC (Saba)  or AQUALECTRA (Curacao) consists of payroll costs, Consumption and Waste of production. Fact is that most of these utility companies are not the Energy or Water producers but the distributors that are governed by a consumption parameters contract with the Energy & Water providing Body.  Meaning the energy and water consumption of the entire country are preset, and therefore actual consumption or over-consumption are not relevant, based upon the hedging trading principle by the consumption fluctuations.   

Example: the utility company signs a contact with the Distributor for 100 million gallons of water with an increase of 5% per year. The real consumption is 80 million, but the Distribution Company is obliged to pay the 100 million gallons.  The 20 million is an amount that has to be paid and is not consumed which refers directly to “Waste” not “Production Costs” while on the utility bills this phenomenon is rephrased as “Fuel Clause” to the consumer. This action has been taking place for over 3 decades in the entire Dutch Caribbean in which Distributing companies pay unconsumed production and is forced into a fuel clause decoration to the consumer.

Questions and Answers
The question that arises is why the Fuel Clause is higher than the consumption? The Answer relies on that the actual consumption does not meet the preset contract parameters, and therefore the waste has to be allocated as fuel clause.

Utility bills influenced by  Government Immigration policies
In order to reduce the Fuel Clause significantly, consumption of water and light must be promoted, meaning growth of the population with aligned housing projects are necessary, under the existing circumstances.  The immigration policies with anti-immigrant objectives have an adverse reaction on the utility bills if the current population is reduced significantly and financially devastating for the small man that remains hanging on the last rings of the food chain.
These are factors that are forgotten by Governments that lack understanding of the financial dynamics in the utility areas and the reluctance to allow Risk Analysts to secure the community against inconvenient financial impact.

Fact is that by reducing the Population significantly in any form, the waste of the production will systematically increase with an uncontainable direct impact on the Fuel Clause that should cover the “Preset Waste”. Is the Ministry of Justice aware of this event when applying anti-immigrants policies?

The Financial Vicious Cycle
The problem in the vicious cycle is, that should the utility company build storage tanks to avoid waste, the Production plant remains with an increasing fee per m3 per year and the consumption remains low, there is no financial leverage placing the burden on the remaining utility consumers in the Dutch Caribbean resulting in higher utility bills.

Governments have failed?
The introduction of fuel clauses is considered an easy way to cover-up mismanagement due to lack of planning and vision. The question that arise is who is responsible for this catastrophe within the Dutch Caribbean or is it a legal and quick way to pickpocket consumers without resistance because of a created monopoly position of the utility companies in the Dutch Caribbean Kingdom with the intend to reduce the National Deficit with the dividends or advances on these to the Governments. This is a very interesting subject that any Government should have an understanding of the financial dynamics to help their constituency in hard times.