Episode Transcript
[00:00:01] Speaker A: The best insight, instant feedback, accountability. The all new talk Radio Freedom 106.5.
[00:00:07] Speaker B: And welcome to our program to speak to us about some developments when it comes to retail fuel industry.
Let's welcome to our show president elect of the Owners and Dealers association rival Chachagoon. Good morning to you and welcome to our show.
[00:00:29] Speaker C: Good morning Satish. Good morning to your listeners and your viewers online. It's a pleasure to be here this morning to talk about our industry.
[00:00:39] Speaker B: Let's begin by allowing you, let me allow you the opportunity to familiarize our listeners with you and with this new organization, owners dealers association. Tell us about it.
[00:00:53] Speaker C: So owner Dealers association, as the name implies, there are people that actually own the gas stations. So what we have to understand here is that distributors, which in most cases is estate, other than UnIpet, Unipet only owns two stations and NP, which is estate, only owns 80. So there are 57 people that actually own a land and building plant and machinery and so on. Now, in our industry we are governed by Ministry of Finance. However, we are regulated by Ministry of Energy. How are we governed by Ministry of Finance? Just because Ministry of Finance dictate our profitability and so on in terms of the financial impact of it. And well, as you emerge in Ministry of Energy gets into the day to day operation, any rules, any regulations and so on. So predominantly there are two distributors in our country, NP and Unipet. We are. There is another association that all dealers are regulated are represented by called Petroleum Dealers association. But you know, so why have an ex or a new association? And a simple answer is simply this.
In our industry as time would have it, and I would be bringing it up from time to time has been in existence for well over 70 something years. NB started in the 1970s. Our economy had multinationals prior to that and so on. And in terms of representation, we have no shortages of issue for both petroleum dealers to function as well as the owner dealers.
The major differences is that petroleum dealers will continue because they are formed from Akafali men. They are actually any books. We are very focused on getting or representing particular items. And once we get that, I think that this organization may cease from thereafter.
Our business are very regulated and according to the numbers that I just give that 57 are owned by owner dealers and 82 stations are owned by distributors. And at no point in time anybody ever asks what are the owner dealers requests, suggestions or even a seat at the table. And we make a lot of decisions based on Wimps and fancy in this industry. Let me explain what is wimps and fancy?
Ministry of Energy. There is nobody in that ministry ever run a gas station.
National Petroleum. There's nobody ever run a gas station, believe it or not. Unipets management. Nobody ever run a gas station. However, in all the decision making, guess who makes the decisions? Those three bodies. So when one look at that, you know, one really have to beg a question is, are we an essential service?
Are we a voice of a business community? Do we have issues?
You know, is it being represented to all? Now, I was listening to your program prior to this and I would like to tell you this and your listeners as well. We, as Trinidadians and Tobago Indians must understand that government spending are funded by taxpayers.
Let me repeat that. All government spending are funded by taxpayers. So we must say that when government decided they're going to do a project means that they're spending our money. How is that relevant to our industry? Well, let's just start off that. The last audited financial statements that produced to the public for national petroleum is in 2019.
Yes, almost five years uncounted.
Why is this important?
In 2019, national petroleum sales, gross sales was close to $4 billion, I repeat, $4 billion. And why the public have not seen any updated accounts in this. Now, as the population of Trinidad will know from 2019 to now how much times fuel have increased in costs. So it could very well be to date, they're probably doing closer. And this is approximation. I have no arm insider information from NB, but I will say not of $7 billion.
Why is this is important?
As. As time would have it, I'm yet to rarely see national petroleum makes any profit.
NP owns 82 stations, but they supply wholesale fuel for 115 stations.
If my dealers, my members each have one, one station, some may have two and so forth, some may have three, can turn around a profit by having one station to pay staff, mortgages and so on. How could somebody that have 100 and something stations for supply not make a profit?
So let's talk about commissions. In the fuel industry. We have never yet gotten percentage per dollar. What I mean, if gas is $5 and again 10% is $0.50, we have never gotten that. What we have seen for many years is that the price has gone up and our commissions per litre has remained the same. It's within the last 510 years we have gotten some increase. And believe it or not, we are grateful to Minister Inbert for that as well as for what minister Young is doing in our industry.
What are we grateful for? Somebody is actually focusing on our industry and this is the right time for doing that. But I digress.
National petroleum continues to make a loss.
Government expenditure to upgrades and so on is tuned to almost 100 million here, 50 million there every year. So in addition to the loss, your money from taxpayers are facilitating upgrades and so on. And why am I saying this? So an owner dealer station for those that own the land, the building, the pump stanks, canopy, the distributor investment in that station is nothing more than he signs on economy.
So you may have a station with equipment and land. Let's just say for arguments like 10 million and your sign is 100,000 and the commissions now for the wholesaler is in and around thirty cents and for your retailer is thirty three cents per liter. So it's almost 42% of the commissions, 48% for the wholesaler and 52. I think our industry is the only industry where the disband to the retailer. Why is this important?
As you would know, a couple years ago there was a major shutdown prior to my stations turning to Unipet. So I may not have all the information.
And this fuel supply was stopped because of money.
Now I don't know what concession the state would have made, if any, to that private distributor. However, one thing we would be reminded of is the click on HCU fiasco.
Any distribution change, any chain.
We have two suppliers. And is it that we intend for taxpayers to always do bailouts? Is that our intention? In terms of our industry? I am this right.
The government has said they want to. To privatize stations or sell NP stations. Well, here is the thing.
As I own a dealer with all my investment pump, tanks, canopy, whatever have you, my commissions are the same as somebody walk off the street and say, hey, I want to rent a gas station. There's no difference. That equation is wrong. That equation is unacceptable worldwide. Right? Because the investments are very different. Why would a dealer want to do it? Well, probably because we have hope that at some point in time we could have our own brands in Trinidad where independent brands, our national petroleum could be profitable. Because I don't think, to be quite honest, that selling the NP stations will solve the problem of the state because that is a major income. Now in looking at national petroleum books, if you have 150 stations it's still not making a profit.
You as or we as a state sell fuel to marines. Where that is sellers international market. And that is in us dollars?
Yes, us dollars.
NP on their website says that they have operation in Dominica, that is a foreign currency. They sell oils which they, according to them, they have 24% a market in 14 different regions.
Nowhere in their financials I've seen anything or any mention of us earnings. So as a taxpayer, where is that? Where is the us that all the businesses are struggling for?
Where is that income? Why is this as a tax I cannot get from national petroleum, at least every year a new police station, some fire hydrants, hospital care also. And as a nation, we need to hold not only government, because I don't think that the prime minister or the opposition go and run any day to day operation of any state agency. We have to hold ourselves as taxpayers and citizens of this nation to a higher standard that they're doing what is required to make sure that there's very little leakage and is managing well. Okay.
[00:12:03] Speaker B: You'Ve given us a lot of information.
We started one place and we ended up another. As you are, as you outline all these various issues. And I'm assuming from the gist of the conversation that a lot of your focus is on NP and what are the NP's doing and everything else. The Owner dealers Association, what's your objective, what it is, what are you looking or what are you seeking to achieve with this organization? Because you've seen that there are some issues and once those issues are addressed, the organization may be disbanded. So what are those issues that you want addressed?
[00:12:40] Speaker C: So let's talk about investment.
To begin with, I think they should have. For those citizens who require to invest in complete stations, it ought not to have the margins that we have now. This margins, these commissions has nothing to do with the price of the pound. It's talking about the general equation between a distributor and a retailer, right? If I choose to buy direct from Parian, therefore I should be getting a larger sum of the margins. Let's talk about operational issues.
Would you believe that these road tank wagons have no calibration or certification for we as a dealer? I tell you something satisian, our industrial thing, that gas station business only started a couple of weeks ago in the way that we operate. You see, because NP, ministry, Energy Unipet never had the day to day running of a station.
Things are made willy nilly in our operation. So we want to get proper equation for our finance, for our market share. We would like to be self reliant so that we don't have to wonder if distributor change and the personality change, if that their policy will change. Because there is something in our industry called sta's. Stas are really supposed to given to the retailer standard temperature accounting. As you would imagine, fuel evaporates from time to time.
When we put it in our tanks, the vapor that it consistently breed. And it seems as though, and I must say it seamers do.
Wholesalers are benefiting from that. Despite being regulated from Ministry of Finance in terms of profitability. I will be writing to Ministry of Finance on it.
In terms of. One of the things we want to achieve is that we are pending a letter to Minister of finance right now for guidance. Guidance on taxation. As you know, green fund and business levy are on sales. But we, our margins, our commissions is what we make. And not only sales.
Why is this important? Well, people are taxes based on income just like NLCB. They pay on the commissions that they get.
Insurances pay on the commissions that they get. Travel agents pay on commissions that they get. Gas stations pay on the actual dollar value. That is wrong. We want to have a voice in our regulation in terms of how we operate into this region. So that it could be a very long standing one. It is unfortunate that dealers like myself have to come on air to beg for any sort of audience with the ministry or ministers to look at us. And that is where owner leaders stand. We will continue to lobby. We will continue for fear operation and to ensure that as best as we can that that price at the pump is not affected. Because there are things that the dealers could be happy to get as taxation as our stas that will not affect the price of the pump. Because Trinidad and Tobago has a mindset that dealers only want to raise the price of the pump and they get more money. That has never been the case in Trinidad. As the price goes up, our percentage for our investment always fall. In fact we passed ten years is way past 2030 years. We got very small increases like a. As only recently we would have gotten something substantial.
But still it's not. In terms of industry standards. Industry standards is 14%. We are four to 5% per dollar. That is.
[00:16:48] Speaker B: But how much achieve this?
[00:16:51] Speaker C: I think that. That we will be okay, well how.
[00:16:54] Speaker B: Much are you asking for right now?
[00:16:57] Speaker C: We're not asking for anything. All what we asking is for fierce stuff in terms of the equation for the investment.
That has to be a very open conversation in terms of that. So I could. I could say well, give us all. And that may not be appropriate because the distributors have a cost. And a real cost is to move fuel from para to any gas station, whether it be np or diesel. They pay contractors four cents a liter but yet get $0.29. Okay, give them a couple cents for admin.
You know, in terms of states we are making huge losses and have a lot of PSIP and iTunes, a hundreds of million every year. So rather than state continue to do the PSIP and you're going to sell these stations, probably this is something that we have to open the conversation for.
[00:17:49] Speaker B: This you are trying to change or you are seeking to have discussions about possibly changing things that have been in place for a very long period of time and for whatever reason, nothing was done to change it.
[00:18:09] Speaker C: Absolutely.
[00:18:10] Speaker B: Change is a difficult thing in this country for one reason or the other.
How confident are you and your organization and your owner dealers and everybody else that you all can affect the change that you think needs to be implemented?
[00:18:28] Speaker C: So satish. I am very persistent in what I do in terms of change. When nobody taught, when I held the heart of Arima Business association. And one of the things that I did is to make sure that people who applied for firearm users license got some response. If you could recall, this is no different in dealing with this one. You have to be persistent in terms of the information. Bringing has to be palatable and you have to be consistent at it.
Time will tell. I cannot promise that anything is going to change, but what I can promise you this, any dealers that we will continue to fight. Because when somebody invests in a gas station, forget about those that who rent for short term and they leave, right. People don't just invest any business in, they invest in the community. Because one, you have an asset, you have a stadium that cannot be uprooted as fast. More than likely, most dealers say, well, okay, we'll pass it on to our next generation. So it is, this is why you will see those dealers invest into the community, whether it be through the local PTA's, the sporting agency, or whatever, the police station council, they actively take part. So we are here to stay as owner dealers and we will continue to represent our membership in whatever way we can, as best as we can. So hopefully that our next conversation is if I'm invited to a program, is, yes, we have methadone with Ministry of Finance. Yes, we have met with Ministry of Energy and this is how we're going to chart forward.
[00:20:23] Speaker B: Yeah, let's relieve our conversation here this morning, because as you did say, you are writing some letters. I guess you'll have to wait until those letters are dispatched and you get a response or you fail to or whatever else. Before we carry the conversation further, I want to thank you for being with us here this morning and giving us the insight into this. When it comes to fuel in this country. We have so many discussions that we need to have. This is definitely one of those. Thank you for being with us here this morning.
[00:20:48] Speaker C: Thank you so much for having me.
[00:20:50] Speaker A: The best insight, instant feedback, accountability. The all new talk radio Freedom 106.5.
