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The gas station racket

Sunday, June 16, 2013

If a history of official corruption in T&T were ever to be written, one suspects it would begin with the gas station racket. This was well chronicled in the records of what came to be known as the Gas Station Racket Enquiry of 1965, in which Gene Miles emerged as a star witness. 


Testimony at the inquiry suggested the involvement of government officials, including former minister of petroleum and mines, John O’Halloran, in awarding lucrative gas station licences for kickbacks. Major fortunes were made through the award of those licences.


The true legacy of the gas station racket, however, is that it set a template for doing business with the State, from which we are yet to recover.


In the interest of full disclosure: on December 19, 2003, I submitted an application to the National Petroleum Marketing Company (NP), which was a response to a public advertisement for “Request for Proposal to Operate Service Stations, Quikshoppes and Convenience Stores.”


There were 13 sites being offered at the time. It seemed like a good business proposition and, with the support of my bankers, I put in my bid just before the deadline, after paying earlier the $500 fee for a tender document. My research showed that, with the used-car industry beginning to take off, total vehicle sales had moved from 7,140 in 1995 to 23,568 in 2002 (a 330 per cent increase), with all the implications for fuel sales and convenience store purchases that would entail.


Two friends, who were similarly entrepreneurial and with no political connections, had also submitted bids for other service stations. 


Months passed without our hearing anything and although my friends soon began to despair that the gas stations were going to be awarded based on the O’Halloran model, I advised them to trust the process, since we had all submitted well-researched proposals and had been able to accumulate teams with solid retail industry experience.


Eventually, we were contacted only to be informed that the process had been scrapped without explanation: NP had decided not to pursue its franchising strategy and all applicants would be refunded their tender deposits.


Although no official word had been given, there was talk that the ghost of O’Halloran was, 37 years later, still hovering over the PNM, and the government of the day was reluctant to make any awards which could lead to political fallout. 


Neither of my friends fell into the category of friend or supporter of the PNM, and like me at the time, had no political strings to pull. They shrugged off the disappointment and both subsequently emigrated. I lost interest in the gas station business.


By November 2011, NP was again inviting proposals to operate its Quikshoppes and service stations and, although I now counted NP’s CEO Kenneth Mohammed as an old school friend, I knew I would not be submitting a tender.


There were constant changes to the closing dates for applications, which were first invited in late 2011 and then again a year later, when the closing dates changed at least three times. This time, I suspected the invisible hand of political directors in the entire process and wondered whether the corporate strategy was intended to strengthen NP’s bottom line or reward PP friends and financiers. While I have every confidence in Mohammed’s integrity, I have been around long enough to know the pressures under which the CEOs of state enterprise operate, especially under the current dispensation, and did not even make a call to inquire.


Also, I did not think the gas station business is what is used to be and the present proposals are nothing but an attempt by NP to pass on the risks to franchisees.


In 2011 NP’s profits fell from $64.9 million to $34.9 million and with the Finance Minister having telegraphed the reduction of the fuel subsidy, lower margins can be expected for both NP and its fuel stations. NP, however, advertised the dealerships as a major business opportunity.


It did not surprise me then, when the Express last weekend published a list of successful tender awardees, the principals of which read like a Who’s Who of the People’s Partnership administration. There was Damian Lyder, the husband of Works and Infrastructure Junior Minister Stacy Roopnarine; Nyree Alfonso, the chairman of the board of First Citizens; and several other current or former board members of state enterprises. 


The names of former Unit Trust executive director Clarry Benn and former PNM Point Fortin mayor Francis Bertrand were thrown in for good measure.


Now it could be that the list of the awardees submitted the best bids possible and the fact that they were, in the main, prominent supporters of the PP, was only coincidental, but the odds do not favour it.


The real truth of the matter is that in 1965, when the list of those awarded fuel-station dealerships was such a big thing that it necessitated a commission of enquiry that has gone down into legend, in 2013 the large-scale award of similar licences was not even a front-page story.


It is a cause for despair when one hears the Minister of Energy describing as wastage the construction under the PNM of a $440 million headquarters for Petrotrin, which has 5,000-plus employees, while approving an $800 million plan for headquarters for the NGC (which has 800 workers), tipped to be built by a party financier who worked on the home of the Prime Minister and another PP party leader. 


It is then easy to understand why the Cabinet would think nothing of approving $6.8 million to pull a firetruck back onto the road.

​Maxie Cuffie runs a media consultancy, Integrated Media Company Ltd, is an economics graduate of the UWI and holds an MPA from the Harvard Kennedy School as a Mason Fellow in Public Policy and Management.


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