An­drea Perez-Sobers

Se­nior Re­porter

an­drea.perez-sobers@guardian.co.tt

The re­tail fu­el in­dus­try needs re­align­ment and should be com­men­su­rate with the di­rect fi­nan­cial in­vest­ments made in­to the gas sta­tions. It is against this back­ground the Own­ers Deal­ers As­so­ci­a­tion (ODA) has been formed.

The pres­i­dent-elect of the ODA is Reval Chat­ter­goon and the as­so­ci­a­tion was formed over a week ago.

He is the for­mer pres­i­dent of the Ari­ma Busi­ness As­so­ci­a­tion (ABA).

In an in­ter­view with the Sun­day Busi­ness Guardian, Chat­ter­goon said while there is the Pe­tro­le­um Deal­ers As­so­ci­a­tion (PDA), the ODA was formed as the gas sta­tion own­ers have very lit­tle to no in­put in de­ci­sion mak­ing with­in the in­dus­try.

“It is this ab­sence of a voice at the leg­isla­tive ta­ble for con­sid­er­a­tion to be giv­en to our spe­cialised in­ter­est group that is one of the main cat­a­lysts for the for­ma­tion of the ODA. Many times, con­sul­ta­tions on poli­cies that af­fect the re­tail fu­el in­dus­try are held be­tween reg­u­la­to­ry bod­ies and fu­el dis­trib­u­tors (Na­tion­al Pe­tro­le­um Mar­ket­ing Com­pa­ny and Unipet) with no con­sid­er­a­tion for the front­line, which is the Deal­er Own­ers,” Chat­ter­goon said.

In out­lin­ing why the re­tail fu­el in­dus­try needs re­align­ment, he said the cur­rent al­lo­ca­tion of mar­gins/com­mis­sions does not dif­fer­en­ti­ate be­tween an in­di­vid­ual/en­ti­ty (in­vestor) who bears full fi­nan­cial costs of in­vest­ing in land, build­ing and equip­ment and the op­er­a­tion of a ser­vice sta­tion and one whose on­ly in­vest­ment is fab­ri­cat­ing a sign to af­fix to a gas sta­tion’s canopy.

“This dif­fer­en­ti­a­tion is nec­es­sary to cre­ate in­cen­tives for in­vest­ment and lessen the bur­den on tax­pay­ers who even­tu­al­ly foot the bill for loss­es due to mis­man­age­ment. The present de­pen­den­cy on gov­ern­ment grants and as­sis­tance is still preva­lent, while le­git­i­mate deal­er-owned and op­er­at­ed sites are on­ly af­ford­ed the same re­tail fu­el mar­gins/com­mis­sions en­joyed by sta­tions owned and op­er­at­ed by fu­el dis­trib­u­tors that ben­e­fit from Gov­ern­ment in­ter­ven­tion,” Chat­ter­goon de­tailed.

Prop­er reg­u­la­tion

Al­though the fu­el in­dus­try is gov­erned by the Min­istry of Fi­nance and reg­u­lat­ed by the Min­istry of En­er­gy and En­er­gy In­dus­tries, the ODA pres­i­dent said re­tail­ers are al­so re­quired to be com­pli­ant with the Min­istry of Trade and In­dus­try, Min­istry of Na­tion­al Se­cu­ri­ty, Min­istry of Plan­ning and De­vel­op­ment, their re­spec­tive fu­el dis­trib­u­tor and its fi­nan­cial in­sti­tu­tions of which all cer­ti­fi­ca­tions and costs are borne by the own­er/deal­er.

Chat­ter­goon not­ed that these reg­u­la­to­ry bod­ies have man­dates in ef­fect to pro­tect the con­sumer.

How­ev­er, he high­light­ed there is very lit­tle over­sight if any from the En­er­gy and Fi­nance min­istries to en­sure fair con­trac­tu­al re­la­tion­ships be­tween own­er/deal­ers and the re­spec­tive dis­trib­u­tors.

“ODA un­der­stands that the in­equities are far-reach­ing and there is very lit­tle re­course for is­sues be­ing faced by own­er/deal­ers, which in­clude but are not lim­it­ed to vari­ances, in­creas­es in ex­pens­es due to so­cial and eco­nom­ic prob­lems, mar­gins that are not mar­gins but com­mis­sions on fu­el sold, pol­i­cy for­mu­la­tion and req­ui­site im­pli­ca­tions. Changes with­in the up­stream oil/gas in­dus­try that the Min­istry of Fi­nance and Min­istry of En­er­gy and En­er­gy In­dus­tries have made, in­di­cate their will­ing­ness to im­prove the in­dus­try for both con­sumers and deal­ers. The ODA be­lieves that now is the best time to work with and lob­by the Gov­ern­ment for changes with­in the re­tail fu­el in­dus­try that have been ne­glect­ed for many years,” Chat­ter­goon said.

Vi­sion

So what’s the vi­sion of the ODA?

Chat­ter­goon said the mis­sion is to have fair­ly reg­u­lat­ed op­er­a­tions for all based on the in­vest­ment placed in­to the gas sta­tion.

“Gas sta­tions have op­er­at­ed as a col­lect­ing agency for the state for years and have been tak­en for grant­ed. We are on­ly im­por­tant when the ser­vice be­comes scarce or dur­ing pe­ri­ods of emer­gency as seen dur­ing fu­el short­ages and the COVID-19 pan­dem­ic.”

Speak­ing on the mem­ber­ship, Chat­ter­goon said ODA com­pris­es own­er/deal­ers from both NP and Unipet, as well as own­er/deal­ers.

He un­der­scored that all mem­ber­ship de­tails will re­main con­fi­den­tial, save for where re­quired by law or by con­sent of the in­di­vid­ual mem­bers.

Asked how many deal­ers joined the as­so­ci­a­tion, Chat­ter­goon said “In just un­der one week, the ODA has both NPMC and UNIPET deal­er own­ers com­pris­ing 18 per cent of own­er/deal­ers. I am cer­tain that very soon, we will have 85 per cent of 57 own­er/deal­ers join­ing the ODA.”

On whether the Gov­ern­ment will al­so recog­nise this as­so­ci­a­tion as it does the PDA, the pres­i­dent said as in any as­so­ci­a­tion, the gov­ern­ment will lis­ten de­pend­ing on how in­for­ma­tion is ad­dressed to them.

“I have al­ways found it eas­i­er to work with the state to cre­ate change. When I took over the ABA, it was dor­mant and with­out a voice. Dur­ing my tenure, I have kept in touch on key is­sues, and I have earned a seat at the ta­ble to be heard. The dif­fer­ence with the ODA is that I have al­most 30 years in the re­tail fu­el in­dus­try, and I am very pas­sion­ate about it. One can al­so say that gas sta­tions are de­pen­dent on all sec­tors to be suc­cess­ful. COVID has cer­tain­ly taught us this,” Chat­ter­goon added.

A good move

ODA’s con­sul­tant Dr Vaalmik­ki Ar­joon sees the es­tab­lish­ment of the ODA as a pro­gres­sive and strate­gic step that will strength­en the voice of lo­cal gas sta­tion re­tail­ers.

Ar­joon said the in­vest­ment of own­er/deal­ers is quite sub­stan­tial, as they not on­ly op­er­ate the gas sta­tion but al­so own the land, prop­er­ty, and gas sta­tion in­fra­struc­ture.

“Giv­en the mag­ni­tude of their in­vest­ments, it is there­fore im­por­tant for these busi­ness­men to have a uni­fied voice, and the ODA fills this gap in the in­dus­try’s struc­ture, en­sur­ing that their voic­es are heard and in­ter­ests con­sid­ered in the pol­i­cy-mak­ing process, there­by pro­mot­ing fair­er and sus­tain­able in­dus­try prac­tices.

“Over time, the growth of the or­gan­i­sa­tion can strength­en the bar­gain­ing pow­er of re­tail­ers with fu­el dis­trib­u­tors and gov­ern­ment bod­ies, po­ten­tial­ly lead­ing to bet­ter con­trac­tu­al terms, which will lead to tan­gi­ble im­prove­ments in the op­er­a­tional and fi­nan­cial con­di­tions for gas sta­tion own­ers. At the same time, the ODA is al­so ex­pect­ed to as­sist with en­hanc­ing reg­u­la­to­ry com­pli­ance and re­duc­ing the ad­min­is­tra­tive bur­den on their mem­bers through col­lec­tive sup­port,” Ar­joon said.

Lib­er­alised regime?

In the 2021 bud­get speech, which was de­liv­ered on Oc­to­ber 5, 2020, Min­is­ter of Fi­nance, Colm Im­bert, said the fu­el mar­ket would be lib­er­alised and the statu­to­ry mar­gins re­moved: “Un­der this arrange­ment, which is tar­get­ed for in­tro­duc­tion in Jan­u­ary 2021, the fixed re­tail mar­gins for all liq­uid pe­tro­le­um prod­ucts will be re­moved; pe­tro­le­um re­tail­ers and deal­ers will now be al­lowed to fix their own mar­gins.

“Whole­sale mar­gins will re­main fixed for the time be­ing and an ap­pro­pri­ate but rea­son­able tax in­tro­duced to com­pen­sate for the cur­rent fu­el sur­plus that is gen­er­at­ed on the sale of gaso­line, be­cause of de­pressed oil prices. The net re­sult should be lit­tle or no in­crease in the price of mo­tor fu­els at cur­rent oil prices. How­ev­er, it must be not­ed that if the price of oil re­cov­ers, the price of gaso­line and diesel will nat­u­ral­ly in­crease pro­por­tion­ate­ly.”

The fu­el mar­ket in T&T has not been lib­er­alised.