JGRA wants oil companies barred
THE Jamaica Gasoline and Retailers Association (JGRA) is once again trying to push the Government to enact legislation that would bar petroleum marketing companies from the retail trade.
This will be one of the main topics that will be discussed at tomorrow’s special emergency meeting between JGRA members and commerce, science and technology minister Phillip Paulwell, under whose portfolio the petroleum industry falls.
“The marketing companies are retailing so they have two margins and are competing with the retailers who are working with one margin,” Lloyd G Brown, president of the JGRA said. “And it so happens that they select the major stations to take over and do this,” Brown added.
The legislation, Brown said, will require the marketing companies to decide “whether they are wholesalers or retailers”.
The issue of the involvement of international petroleum marketing companies has, however, been on the table since 1996 when gasoline retailers complained that there was inequality between them and the marketing companies.
The JGRA, however, raised concerns about the marketing companies after Shell terminated the contracts of seven of its dealers in 1996.
But Shell contended then that the contracts were terminated because they failed to operate at a standard consistent with the company’s mandate.
The termination of the Shell dealers led to a lock-down of all Shell station in 1996.
Geraldine Foster, a former executive director of the Fair Trading Commission, who represented the JGRA in 1998, cited the need for a “devorcement law” that would prescribe the proximity within which marketing companies can operate their own service stations from those operated by its dealers. The idea, she said, was to create a level playing field.
Meanwhile, Brown said the issue of costs associated with fuel and utility — particularly repair and maintenance — will also be high on the agenda of tomorrow’s meeting.
“These are costs that the marketing companies traditionally offset,” he explained. “But now they are passing a lot of these costs to the operators.”
Those costs, according to Brown, have been nibbling away at their profits over the years, but the “full gravity have come to bear on us because of all the other costs that we have to bear”.
“A lot of us are falling due to the harsh economic climate and are not in a position to adjust our margins because of the relationship with the marketing companies,” he added.
In addition, he said there will be talks on the wage settlement for its staff, which has been “dragging on” since last October when the National Workers Union, which represents the workers, proposed a 70 per cent salary increase over a two-year period.
That would be broken down to a 40 per cent increase in the first year and 30 per cent in the second year retroactive to October 2002.
“We have to take a position on how best to deal with that,” he told the Observer.
He, however, added that if JGRA members have to settle at a high rate they may have to switch from pump attendants to “self-serve”.
“This will lead to high unemployment. But if we are boxed in a corner we may have to resort to that,” he said.
Yesterday, Brown said because of the rising oil prices worldwide, local retailers are now confronted with increased costs but do not have the “latitude” to make the necessary adjustments.
“That’s where the problem is,” he explained. “We have to fork up a lot more to buy the fuel and our margin is essentially fixed.”
In addition, he said the price hike has seen consumers switching from premium grade fuel to the “regular grade”.