Buy your own oil - Put up or shut up, PCJ tells private sector
Christopher Cargill, chairman of Petroleum Corporation of Jamaica, yesterday challenged the private sector to put up or shut up, if it is dissatisfied with the way the State-run oil refinery does business.
"I encourage, and you can quote me, anybody who believes that they can come and make these super profits that they accuse us of ... it is a fully deregulated market (and) we can't stop them," he said. "If the public and the market believe that Petrojam is doing a poor job and they are overpricing the market ...; if Petrojam is ripping off the country, then trust me, private sector would bring in products, cheaper than the refinery and sell it into the market and make huge profits," he bluntly declared at what was advertised as an open forum on petroleum pricing at the
company's Trafalgar Road, New Kingston, headquarters.
However, William Mahfood, president of the Private Sector Organisation of Jamaica (PSOJ) dismissed this recommendation, at least, in the short or medium term, explaining that none of his members were not at this time exploring such a mega-investment option.
"It would require about US$1 billion, then there is refinery, the tankers, the facilities and the market is not big enough for two players," he told The Gleaner. "Government just needs to ensure greater transparency," he said, adding that
the long-term contractual arrangements the company has with international suppliers would put any entrant at a severe disadvantage.
Following presentations by Cargill, Winston Watson, general manager of the PCJ, Michael Hewitt, general manager of Petrojam, and State Minister for Energy Julian Robinson seemed, for the most part, confused and the issues seemed to get more muddy, the more the executives sought to clarify them. This prompted Petrojam chairman Irvin Jones to intervene.
"There is a little bit of confusion because I get the sense that some people believe that we can set the price, the finished-product price; that we can determine what that price is. We cannot. That price is set by the market," he added. Still, confusion continued at the event which was advertised to provide a clearer understanding of the pricing mechanism used by Petrojam.
Meanwhile, Mahfood who missed the forum due to prior commitments expressed disappointment at yesterday's hike in the prices of all petroleum products, except for automotive diesel, which fell by $1.38, despite the fact that this was the first price increase in almost three months.
"I was very, very distraught to see that they actually raised the price of 87 and 90 by 86 cents a litre," he admitted, before taking issue with the presentation, which The Gleaner has learnt, was a duplication of the one shared with PSOJ, and which remains a source of discontent.
"Having gone through the same sort of presentation, I'm sure they gave you this morning, which was showing in detail or they tried to show in detail how they arrived at the ex-refinery pricing, I just felt that it was unacceptable and I showed them. I said look, from a straight mathematical calculation, if you do the numbers and look at any measure you want to use, if you want to use Miami reference prices for retail, (or) you can use the Gulf Coast Reference pricing, (and) you can use the crude price, it just doesn't make sense."
"At the end of the day, there has been an almost 50 per cent reduction in oil prices, gas prices, whichever one you want to look at. The Gulf Coast reference price I can share with you; I think it's $1.24 per gallon, coming from $2.80 something cents ... . This is the Gulf Coast Reference price for gas. That price, which is what they always claim they were using as their reference, ... has come down since June of last year by 58 per cent.
"So my argument to them was, look since November they have reduced the ex-refinery price to JPS (Jamaica Public Service Company) on the heavy fuel oil and automotive diesel over 30 per cent. In the same time, they have only reduced their ex-refinery prices on petroleum products by just over 20 per cent."