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Gasolene retailers at odds with Rubis over contractual arrangements

Published:Sunday | December 20, 2015 | 12:00 AMNeville Graham
President of the Jamaica Gasolene Retailers Association, Leonard Green.

A row has erupted between the Jamaica Gasolene Retailers Association (JGRA) and multinational marketing company Rubis over a decision to change their status as dealers and reduce their contractual arrangements to one year instead of the three to five years they are usually granted.

The JGRA said the one-year contracts are bad for business in that they are "not bankable and, therefore, deny many dealers from accessing credit for working capital."

JGRA President Leonard Green, in a release last week, charged that marketing companies are systematically diminishing the status of dealers by offering contracts that are not in their best interests.

"When a marketing company comes and moves you from a dealer contract to a bare licence contract, the marketing company is basically removing all your privileges and rights as an entrepreneur and reducing you to a bare licensee, just giving you authorisation to use their name and sell their products. You have no rights whatsoever," he said.

The diminishing status that Green speaks of has to do with demanding that dealers sign one-year licences rather than the three or five year agreements to which they are accustomed. Green noted "the unrelenting and dismissive behaviour of Rubis in refusing to resolve issues through dialogue, which is consistent with best business practices".

However, Rubis Retail Manager Raymond Samuels said the company's way of operating is through a process of constructive engagement, noting that this is the way they do business with everyone at all levels.

"Rubis has always engaged and remains committed to continued engagement with each dealer on any concern which either party may have," he said. Samuels said they have been having discussions with the dealers on the current concerns. He said Rubis is a member of the Jamaica Petroleum Marketers Association and is committed to contributing via the association to the current engagement with the Fair Trading Commission (FTC) and the Ministry of Science, Technology, Energy and Mining.

Sunday Business asked Samuels about the substance of the contracts, but he declined comment, citing confidentiality.

"Our dealer licences are private contractual agreements between Rubis and each individual dealer, and govern the commercial dealings with our dealers. In this regard, we are not able to comment on the content of such agreements as we are bound by confidentiality," Samuels stressed.

He added that the proposed one-year licences are the same ones they have proffered since 2012 when they entered Jamaica, hinting that it will be the same for the future.

"The fundamentals of our dealer licences have not changed since Rubis started doing business in Jamaica," Samuels said, noting that "Rubis will have the option to re-engage each dealer upon expiration of the licences."

However, the JGRA sees it differently. Green said there has been a creeping adjustment of the terms over time, much to the disadvantage of the dealers.

"The status of the dealers has been adjusted over time. We started as service station dealers. That changed to the nomenclature of operators. Then they changed it to licencee, and now what they are granting is just 'bare licence', which removes most of the rights and privileges that an ordinary dealer would enjoy," Green said.

He charged that some of those privileges extend as far as not having a say in the allocation of shelf space at convenience stores run by dealers.

"They impose themselves. They even go into arrangement with third party suppliers to put products in your site and they pull commission from it. They rent your shelf space to third parties and they get a rental even after they have rented these properties to you," Green said.

The dispute between dealers and Rubis has been ongoing for the past year. That resulted in behind-the-scenes efforts to quell the row and saw the energy ministry, along with agencies such as the FTC, intervening at a time when there was near disruption in the petroleum trade.

Over the last three weeks , the JGRA has been meeting with petroleum sector interests to gauge responses and advise of possible action. The dealers are also calling on the Government to intervene in the national interest. They want the authorities to "take whatever actions are necessary to mitigate the risks of disruption in the very sensitive petroleum trade", the JGRA said, hinting at a possible shutdown.

Meanwhile, Rubis is standing by its record. Samuels maintains that the multinational company is serious about being in Jamaica and making a valuable contribution. He noted that they have gone to great lengths to prove their commitment through their level of investments.

"Rubis' commitment to the economic development of Jamaica is evident from the significant investments when Rubis acquired this business in 2012. This is further reinforced through significant investments to upgrade our facilities across the country, starting with the rebranding and ongoing improvements of our service stations, and construction of a new state-of-the-art loading bay, which has increased our distribution capacity," Samuels said.

The JGRA says it will keep on pressing for a better deal as the dispute is not only a matter of the relationship with RUBiS but also other marketing companies operating in Jamaica.