The Steam Packet has not engaged in fuel hedging for more than two decades, Treasury Minister Chris Thomas MHK has confirmed in a written Tynwald answer.
Responding to a question from Juan Watterson MHK, Minister Thomas said the company stopped forward purchasing and hedging in 2005 when the current fuel surcharge mechanism was introduced.
Under that mechanism, the Steam Packet’s net fuel cost is fixed at a base level set out in the Sea Services Agreement and uprated annually for inflation.
Any volatility above that level is passed directly to passengers, freight operators and other customers through surcharges issued with advance notice.
Minister Thomas said this approach “aligns with that of many other ferry operators”, who use Bunker Adjustment Factors to manage fuel price risk.
He added that decisions on whether to resume hedging rest with the Steam Packet Board, not with Treasury.
The written question can be found here.
