Be clear on gas pricing - JGRA boss calls for transparency on alarming Petrojam pricing mechanism
The Jamaica Gasolene Retailers Association (JGRA) is expressing concerns with the pricing mechanism used by Petrojam, asking for a clear and transparent explanation. The organisation is also troubled by the excessive losses of fuel being incurred by Petrojam since 2013.
These were among a number of issues brought to light in the just tabled Auditor General's report into the operations at the Petroleum Corporation of Jamaica (PCJ) and its affiliate, the state-owned oil refinery, Petrojam, which JGRA's president, Gregory Chung, found quite alarming.
"The JGRA is joining the call for a forensic audit of the entity and to put the necessary measures in place to cauterise the losses," Chung said.
The Auditor General's scathing 113-page report, which was tabled in Parliament on Tuesday, questioned Petrojam's pricing mechanism. It pointed out that owing to the absence of minutes for meetings held, it could not be determined whether the market adjustment of fuel was always determined in a transparent manner.
But according to Chung, the saga around how the gas prices are calculated has been an ongoing battle for the JGRA.
"Some time ago the oil prices were down, compared to four years ago when it was at an all-time high, and the public was saying why the price of fuel was so high. At one point, the then finance minister had said that it was the retailers who were responsible for the high price," Chung said.
As a result, he stated that the JGRA undertook its own examination of the issue and what it found was that the cost of fuel was a big problem. Chung said that part of it was the tax, and another part of it was the exchange rate.
"We subsequently met with a committee that was formed to make a recommendation to Petrojam. There was an initial meeting with them and we expressed our concern that, yes, it's based off the Gulf reference pricing and other elements, but there was this other element, and I believe that's what the Auditor General alluded to in her report to the Parliament," the JGRA boss noted.
"It is now time for a clear explanation on this. The report is telling us what many had suspected, but I think the minister, who is also the prime minister, should speak on this."
IT'S NOT ROCKET SCIENCE
Chung said the uncertainty came about when the price of oil was around US$60 per barrel, noting that it was never reflected at the pumps.
"Then in 2012, when the price of oil was over US$100 per barrel, it was reflected at the pumps at the lower end, so we found that strange. Now with this coming out, we are saying let's have a clear, simple way for Jamaica to understand in a transparent way how oil is priced. It's not rocket science," Chung declared.
Chung is calling on Prime Minister Andrew Holness to act swiftly to restore confidence in Petrojam and the entire petroleum trade, with a focus on pricing, contracts and their impact on national development.
"We are hoping that he puts enough energy behind this. He is in charge of other massive portfolios, and we would like to give him the opportunity to be successful at this energy ministry portfolio until he appoints someone there. But at the same time, we are giving him time to respond to this Auditor General's report," said Chung.