The Petroleum Dealers' Association is threatening to reconsider their investment in compressed natural gas (CNG) if Minister of Energy Franklin Khan and the Government does not do something to immediately address the unprofitability of the service they provide.
PDA president Robindranath Naraynsingh made the veiled threat yesterday as he suggested dealers were facing increasing loses due to the hardship faced with providing the facility to customers.
“We are so aghast, we have spoken to all the minsters, we have spoken to all the people in the ministry and what has happened since is that the electricity for the dispensation of CNG continues to escalate and the margins are not there to cover the purchase,” Naraynsingh told Guardian Media in an interview.
His comments came even as consumers in south Trinidad faced another day of difficulty in getting a supply of CNG. He admitted that there had been a level of inconvenience experienced by the motoring public due to the unavailability of CNG at stations in South Trinidad.
Noting that the development of CNG as a vehicular fuel in T&T dates back to a government decision in 2011, Naraynsingh noted that as recently as this year, the Minister of Energy and Energy Industries indicated that Government currently provides $2 billion in funding for the CNG initiative.
That funding, he said, was designed to cater for the construction of new stations, public education and marketing, provision of mobile CNG stations, expert and technical support and radio frequency identification system. There was also a further incentive to supply CNG kits free of charge.
In a press release on behalf of dealers, Naraynsingh lamented that a missing component in the model was the unique cost associated with dispensing CNG to the motoring public, a cost which he said is now entirely borne by CNG operators.
However, Naraynsingh claimed operators do not achieve enough volume to pay for the price attached to the industrial electricity needed and run the pumps and to pay the employee required to dispense the service. He noted that dealers cannot continue to satisfy the expectations of their customers "with the current margins and those in the CNG business will have to reconsider their investments.”
Naraynsingh said dealers currently earn on average as low as $2.50 per $100 sale at the pumps, while they are expected to pay an estimated $10,000 per month for the industrial gas supply to use the pumps, their employees' salaries and cover all other expenses.
He said citizens expect that when they need fuel a gas station will be open for business and stocked with the product they need.
The PDA also acknowledged that the motoring public who use CNG had recently been inconvenienced by the unavailability of CNG at stations in South Trinidad.
Guardian Media understands that customers have been waiting in lines for CNG for over one hour at the Carrousel Service Station and at the Rushworth Street service station.
Guardian Media yesterday reached out to the NGC/CNG about the problems being experienced by the motoring public.
In response to questions sent, NGC/CNG acknowledged that there had been "supply challenges for consumers in South Trinidad after an extensive maintenance programme at NPMC Carousel.”
To meet demand in the interim, NGC/CNG said it had operationalised a Mobile Refuelling Unit (MRU) at the Rushworth Street Service Station, as well as a backup Mobile Refuelling Unit (MRU) at the NPMC Carrousel, which are now fully functional.
NGC/CNG noted that it was also working "expeditiously to ensure that supply is brought back online in the shortest possible timeframe." It said in September 2019, CNG sales crossed a milestone one million litres, "and continue to trend upward." It also highlighted that CNG is the most affordable and only locally produced fuel at $1.00 a litre gasoline-equivalent (lge) when compared to diesel at $3.41/litre, Super $4.97/litre and Premium $5.75/litre.
However, the Petroleum Dealers Associaton said it was concerned that despite the billions of dollars in investments made in CNG by the Government and the further incentives provided, a missing component in the model "was the unique costs associated with dispensing CNG to the motoring public.” The PDA said this cost was borne entirely by CNG operators and called for the removal of electricity charges associated with dispensing the gas.
The PDA said, "CNG equipment requires industrial rate of electricity and attracts a demand charge of approximately $10k per month. This charge is non-existent for the supply of liquid fuel."
The PDA said this unfortunate and unfair situation worsens the current injury being perpetrated on suppliers of liquid fuels who are operating under an uneconomic and business model.
The association said it has had discussions for the past four years with various ministers and government officials but the response has not been encouraging. It said the situation intensified in 2017 when the Government granted a five-cent increase on the petroleum dealers’ margins while simultaneously increasing the price at the pumps and various taxes. Naraynsingh said: “The five-cent margin was taken back with the Business levy and Green Fund levy.
“It seems as though they wanted to give you something but they gave with one hand and they took back with the other hand and the taxes are just putting us in a worse position."
Naraynsingh noted that the impact of the Government’s actions has resulted in maintenance of the industry’s unsustainable price structure. As a result, Naraynsingh said, "The industry is being depressed at this time.”
The PDA added that it is difficult for any industry to operate in a price-controlled situation with unsustainable margins and called on Energy Minister Khan to intervene and remove the specific electricity charges associated with dispensing CNG so that the CNG-using public can get their product in a manner to which they are entitled.
The PDA also wants the Government to provide the 20-cents margin which he said they believe is needed to make the industry viable.
Guardian Media tried calling Minister Khan on his mobile phone but calls went unanswered. We also Whatsapped Khan to find out whether the ministry was willing to remove the electricity cost attached to dispensing CNG or lower the associated taxes but while the message was read he did not respond.