Tue | Jan 22, 2019

GB-Texaco to invest $2b in cement plant, clears $1b debt

Published:Friday | October 19, 2018 | 12:00 AM
Mauricio Pulido, CEO of GB Energy Jamaica-Texaco.

The fight for local cement market share is about to get more intense.

That's if the Haiti-based Gilbert Bigio Group, GB, follows through on a plan to build out a stronger footprint in Jamaica by setting down a cement plant here to make the construction material it now sells in the local trade from its factory in the Dominican Republic.

GB participates in the Jamaican cement market though subsidiary Buying House.

Its main activity in Jamaica is petroleum marketing, through the GB Energy division, which operates the Texaco petrol business it acquired from American oil and gas multinational firm Chevron in 2012.

Having borrowed US$36 million, or just about $1 billion in local currency, to partly finance the purchase of the assets six years ago, GB Energy Jamaica country head Mauricio Pulido said the loan was fully paid off last year with money made by the local business.

Next year will mark 100 years of Texaco operations in Jamaica. GB also bought out Shell Haiti in 2004, purchased Haiti's Texaco network in 2009 before creating the Dinasa fuel brand in that country. In 2012, it bought Chevron's Texaco operations in Jamaica, the Dominican Republic and St Maarten.

Pulido was Chevron's point man on the asset sale and sold off operations in 37 countries in six years, after which he was tapped by GB Energy to run the Jamaican operation as its chef executive officer.

GB began importing cement from its affiliate, Domicem, the main cement manufacturer in Dom Rep, when the Jamaican Government farmed out a maximum 15 per cent share of the market a decade ago to importers, after botched cement got into the trade from the Rockfort, Kingston plant of then sole and still the only manufacturer, Caribbean Cement Company Limited.

Now, in addition to ramping up its petrol business, GB is looking to grab a bigger slice of the cement trade, it says, by giving local builders a cheaper alternative to the Carib Cement product.

Pulido told the Financial Gleaner that while the plans are still "exploratory" and await the results of feasibility studies and government approvals, the initial investment could be in the region of US$15 million or about $2 billion.

In June last year, Domicem donated 5,000 bags of cement to the Jamaican Government in the aftermath of flood rains which caused major damage to public infrastructure.

In addition to petrol and cement, the GB conglomerate is into steel, construction, trading, infrastructure, agricultural-products, edible oils, port operations, finance, real estate and communications. It is also distributor for Nabisco, Kraft, Unilever, and other consumer goods producers.

GB, Pulido said, is on the lookout for opportunities to diversify and deepen its foothold in Jamaica. Recently, it teamed up with Jamaica Producers Group, China Harbour Engineering Company and Punta Cana Resort Group in a failed bid to operate the Norman Manley International Airport that was recently divested to Mexico's Grupo Aeroportuario del Pacifico.

Pulido suggested that the Jamaica cement-making venture, for which a location is still being hunted, could be led out of Haiti through Kolos, a joint venture between Domicem and a group of Italian investors.

"We can put a factory here. The ones we have in Haiti and the Dominican Republic are really nice, state-of-the-art, environmentally friendly. These plants are not full of dust, (they are) perfectly clean," he said.

He added that GB's consideration of greater investment in Jamaica is spurred by the improvements in the local economy.

"We believe that Jamaica is in a very good time right now. The Government genuinely wants to make growth happen," said the native of Colombia, who worked for many years in the Unites States with Chevron.

The GB Jamaica cement factory is expected to employ up to 100 workers at the plant, with many more jobs in distribution.

"We believe that to grow the country, we need to have more affordable materials to build. So, if you have a cheaper cement you can have more houses being built by the government and the private sector," Pulido noted.

Even as GB hunts more business in other sectors in Jamaica, officials of the company have not taken their eyes off strengthening the bottom line of their core fuel business. It is building new service stations and spending significant sums refurbishing old ones, either alone or through partnership with dealers.

Pulido said the company has spent about US$15 million, or about $2 billion, fixing up gas stations over the past six years. This investment is expected to be recovered within eight to 10 years after being expended, he said.

The network of stations is up to 77 now from 52 six years ago. GB Texaco operates only 10 of them, Pulido said. Another three stations will be added by next year, including one being constructed on the Unity Valley property at Ironshore in Montego Bay complete with a shopping plaza.

Pulido said all new Texaco stations will be at "first world" standards, with an emphasis on shopping facilities to drive value added sales. Convenience facilities are said to contribute up to 50 per cent of revenues at some locations.

At one station being upgraded, the Beverly Hills Texaco on Old Hope Road in Kingston, GB Texaco and dealer/owner Annette Wong are said to be jointly spending close to US$2 million, or $264 million, on the overhaul, including putting in ultra-modern pumps and 3,000 square feet of shops. GB Energy, its Jamaica boss said, is training its dealers and encouraging many to become real entrepreneurs.

The GB Jamaica boss is also reporting that aviation fuel sales are on the rise. So too is the sale of asphalt, which over the past three years, GB has been buying from Petrojam and supplying to big contractor CHEC and other road builders.

From just over one million gallons a year in 2012, as well, Texaco now sells more than 30 million gallons of aviation fuel each year at the Sangster International and Norman Manley International airports.

Overall, fuel sales are said to have doubled in the six-year period and so have earnings before interest, taxes, depreciation and amortisation, EBITDA, of around $300 million a year.

Pulido is also proud of Texaco being what he described as Petrojam's No. 1 customer, saying the company buys some 80 million gallons of fuel each year from the refinery, which is owned by the Jamaican and Venezuelan governments.

Texaco Jamaica plans to embark on a centenary celebration road show next year with the developer of its new diesel fuel additive, Techron D. The creator of that product, Pulido said, is a California-based Jamaican who works for Chevron.