Pre-divestment shake-up at Petcom
Avia Collinder, Business Reporter
The board of Petroleum Company of Jamaica Limited, Petcom, has been dismantled and its parent has taken control of the operations in a shake-up of the marketing company, which owns the fourth-largest gas station network in Jamaica.
The board of the Petroleum Corporation of Jamaica (PCJ) took over responsibility for Petcom on October 1, following the removal of the board and the acting general manager, who had been tapped from among the board directors, in a pre-divestment shake-up, and is now headhunting a new GM.
Petcom owns and operates 28 service stations and 14 liquid petroleum gas or LPG filling plants. The state-owned entity will be placed on the market for sale by yearend or early in the new year. The enterprise team handling the divestment is headed by Erwin Jones, the chairman of state-owned oil refinery Petrojam.
Petcom and Petrojam are both subsidiaries of PCJ.
Questions have been raised in Parliament about the ousted chairman and acting GM. Energy Minister Phillip Paulwell has twice been scheduled to supply the answers but other House agenda items have intervened, two weeks in a row.
The Financial Gleaner understands that the management of Petcom has been in limbo since sometime in 2013 when the last appointed general manager separated from the company.
In the interim, the then chairman, Anthony Graham, assumed the job of GM until June 2014 when another board member, Rev Everton Cunningham, took over the role, also in an interim capacity.
Questioned as to the reasons for the changes and why it was necessary to recruit a new boss for a company that was about to be sold, PCJ Chairman Christopher Cargill said on Monday that the company needed a GM to run a tight ship while Petcom positioned for divestment.
"The minister was not happy with the direction in which the previous board was taking Petcom," said Cargill, referring to Energy Minister Paulwell.
"He decided to ask the PCJ board to take over stewardship through to completion of divestment," he said.
Pressed for further details on management issues leading to the board's dispatch, Cargill remained tight-lipped.
The old board was first put in place in 2012, and was freshly reappointed in March of this year, only to be disbanded seven months later.
It's unclear whether Petcom's plans to grow its service stations to 30 and filling stations to 16 - which would have added four new operations to the network, requiring new capital expenditure at a time when the asset was to be sold - factored into the minister's decision.
A Petcom station on Constant Spring Road that bore the marquee up to 2013 has since joined the Total network, in what appeared to be a short-lived dealership for the State's petroleum company. The station previously operated under the independent brand, LG's.
Subsequent to the dismissal of the board, Petcom's operations manager Godfrey Boyd was tapped as acting GM, but will resume his substantive post once a new GM is confirmed to manage the entity through to divestment.
Cargill said the new hire would be done on a short-term contract to June 2015, by which time PCJ expects that divestment agent Development Bank of Jamaica (DBJ) and the Jones-led committee would have struck a deal with a buyer.
Cargill said Pricewaterhouse-Coopers has been commissioned to do the company valuation of Petcom and that this report would be in the hands of the Development Bank of Jamaica by end-November.
"The divestment is still on and should be completed by June 2015. By January the latest, the DBJ should issue the official invitation to bidders," he said.
The planned divestment has been one of the most closely watched locally, with the DBJ stating earlier this year that it had received eight responses to its informal invitation of expressions of interest in the concern.
Petcom sales have topped $11 billion in each of the last two years, according to finance ministry disclosures on public bodies. The company is estimated to have made a profit of $88 million at yearend March 2014, and is projected to nearly triple that performance to more than $230 million net profit this year.
The petroleum marketing company's net worth was also estimated at just under $750 million, and its assets at $1.9 billion, of which $828 million are fixed assets.
The company also appears to have been shedding debt, which fell from $300 million to $238 million at March 2014, and is projected to decline to $175 million by March 2015.
Petcom was run by Courtney Lawes up to 2013.