Derek Achong

The T&T Pe­tro­le­um Deal­ers As­so­ci­a­tion has called on its mem­bers to take steps to con­serve its in­ven­to­ry in an­tic­i­pa­tion of an ex­pect­ed in­crease in de­mand due to the pend­ing hike in fu­el prices on Tues­day. 

The as­so­ci­a­tion made the call in a press re­lease is­sued yes­ter­day fol­low­ing the Min­istry of Fi­nance’s is­suance of the pe­tro­le­um pric­ing or­der for the in­creas­es, which did not in­clude an ad­just­ment of the re­tail mar­gins for whole­salers and re­tail­ers. 

“This in­crease in the price of pe­tro­le­um prod­ucts oc­curred with no con­sul­ta­tion with the pe­tro­le­um deal­ers, who are ex­pect­ed to re­main open as nor­mal and to ex­pect to have their in­ven­to­ries of fu­el de­plet­ed over this long hol­i­day week­end,” it said. 

It ex­plained that the in­crease at the pump with­out an in­crease in mar­gins would di­rect­ly re­duce the vi­a­bil­i­ty of its mem­bers’ busi­ness­es as they would have to bor­row mon­ey to fi­nance the in­creased cost of in­ven­to­ry. 

“Pe­tro­le­um Deal­ers are Price Tak­ers in an in­dus­try of Gov­ern­ment Price Con­trol and are the ones who place their pri­vate cap­i­tal to buy fu­el to sell to the Pub­lic. Deal­ers must be in a po­si­tion to pay their tax­es and cov­er their ex­pens­es, to be able to pro­vide goods and ser­vices to the Mo­tor­ing Pub­lic of T&T,” it said. 

Con­tact­ed yes­ter­day af­ter­noon, Unit­ed In­de­pen­dent Pe­tro­le­um Mark­ing Com­pa­ny Lim­it­ed (Unipet) CEO Dex­ter Ri­ley said that while his or­gan­i­sa­tion agreed with some as­pects of the as­so­ci­a­tion’s re­lease, it was con­fused by the call to pro­tect in­ven­to­ry. 

“I do not know what they mean by that so we did not ad­vise our cus­tomers on that point,” Ri­ley said. 

Ri­ley ex­plained that the price in­crease would di­rect­ly af­fect his com­pa­ny, which en­gages in the whole­sale and re­tail of pe­tro­le­um prod­ucts, as it would mean an in­crease in rev­enues and a cor­re­spond­ing rise in Green Fund and Busi­ness Levy pay­ments. 

“So with the same mar­gin, we would have to pay more tax­es,” he said. 

Ri­ley said that deal­ers would al­so have to in­cur in­creased bank fees as they would have to source ad­di­tion­al fi­nances to pay for the same vol­umes of fu­el. 

While Ri­ley not­ed that pe­tro­le­um deal­ers re­ceived some re­lief in 2017 and 2020 when the Gov­ern­ment twice in­creased their mar­gins by five cents per litre, such was quick­ly erod­ed by suc­ces­sive in­creas­es in the cost of fu­el at the pump.

“Now we are get­ting a large drop which is a $1. Our tax­es alone would go up by ap­prox­i­mate­ly 21 per­cent,” he said. 

Asked what ac­tion, if any, could be tak­en by his com­pa­ny to al­le­vi­ate the sit­u­a­tion, Ri­ley ad­mit­ted that it was lim­it­ed to con­tin­u­ous ad­vo­ca­cy to the Gov­ern­ment. 

“Ba­si­cal­ly, we hope to en­gage the au­thor­i­ties and point out the im­pact in a more de­tailed way in the hope that they would recog­nise the need and val­ue of this es­sen­tial ser­vice, the fact we trans­port dan­ger­ous goods; and that it is a labour and cap­i­tal in­ten­sive in­dus­try,” Ri­ley said. 

Ri­ley sug­gest­ed that the de­crease in vi­a­bil­i­ty of the in­dus­try would al­so ham­per the abil­i­ty of mem­bers to in­vest in clean en­er­gy so­lu­tions with the glob­al shift to­wards elec­tric and hy­brid ve­hi­cles. 

“We need the op­por­tu­ni­ty to make this in­vest­ment and that has to come from the mar­gin as well,” Ri­ley said. 

Con­tact­ed yes­ter­day, gas sta­tion own­er/op­er­a­tor Reval Chat­ter­goon said that while he had not seen the re­lease from the as­so­ci­a­tion, he could un­der­stand why fel­low deal­ers may be tempt­ed to con­sid­er it. 

“It makes some­what fi­nan­cial sense be­cause as a gas sta­tion op­er­a­tor we have a very abu­sive re­la­tion­ship where no­body re­al­ly ap­pre­ci­ates the gas sta­tion deal­er and un­der­stands that we are re­al­ly get­ting bread­crumbs all the time,” Chat­ter­goon said. 

“I would not get an­gry at any­body who wants to man­age their in­ven­to­ry to make some­thing be­cause for far too many years we have been mak­ing less than our em­ploy­ees or jan­i­tors in the dis­tri­b­u­tion net­work and in the Min­istry of En­er­gy...The abuse has to stop,” he added.  

He not­ed that while on pa­per gas sta­tion op­er­a­tors make four and a half per cent on a litre, in re­al­i­ty, it is two and a half per­cent be­fore over­heads as 0.9 per cent goes to tax­es and one per cent to cred­it card sales. 

“I be­lieve we may be the on­ly in­dus­try in the world that could op­er­ate on those kinds of mar­gins,” Chat­ter­goon said, as he not­ed that gas sta­tion op­er­a­tors in the Unit­ed States make be­tween ten and 13 per cent. 

Chat­ter­goon, the for­mer head of the Ari­ma Busi­ness As­so­ci­a­tion, said that he had writ­ten to En­er­gy and En­er­gy In­dus­tries Min­is­ter Stu­art Young sev­er­al times seek­ing a meet­ing to dis­cuss peren­ni­al is­sues plagu­ing the in­dus­try to no avail. 

He ex­pressed hope that he would be grant­ed the meet­ing soon and the Gov­ern­ment would re­con­sid­er its po­si­tion on the mar­gins. 

“They have some time that they could change it...At the end of the day, if the Gov­ern­ment is get­ting a dol­lar more, you mean to say that they can not give five cents or ten cents on that dol­lar?” he said. 

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