Management at Belco is not sure how the latest budget will affect the cost of fuel used to power their station.

And they say they have yet to receive clarification from the Ministry of Finance on the issue.

Questions concerning the affect of rising fuel costs on inflation were raised in Monday's meeting of the Senate by Independent Senator Walwyn Hughes.

Mr. Hughes said that rising fuel costs would be passed on from large consumers to small consumers but said there was a rumour that Belco had been exempted from fuel tax increases.

On March 1, Shadow Finance Minister Dr. Grant Gibbons said the possible inflationary effects of increasing fuel prices by five percent will not really be seen until Belco charges trickle down to consumers.

At the same time, Belco president Gary Madeiros said he was not sure if the company was affected or not.

He said that after looking at the speech it appeared as if they would be impacted, but a representative from the Ministry of Finance had indicated that their category was not affected.

Mr. Madeiros said they had written to the Ministry for clarification, but yesterday a Belco spokesperson said they had not yet received a reply.

In his latest Budget statement, Finance Minister Eugene Cox said that Bermuda had experienced an increase in the rate of inflation since the summer of 1999 primarily due to the steep increase in world oil prices.

He said that as a small open economy without significant domestic production, the Island was susceptible to the effect foreign inflation had on imported goods.

He also said that Bermuda was very dependent on petroleum as the energy source for electricity as well as transportation.

The rate of inflation in Bermuda in 1999, as measured by the Consumers Price Index (CPI) was 2.4 percent. The rate of inflation was slightly higher in the year 2000 and is expected to be 2.7 percent for the year.