Jamaican gas station owners launch new petroleum marketing company FESCO
Five gas station owners have banded together to form their own marketing company and retail chain, which is already doing business under the banner of FESCO.
Four service stations are already up and running and another six are expected to join the network by yearend. But even while the network is just getting off the ground, Fesco is already working on plans to install electrical charging stations for hybrid and electric cars - a project it wants to roll out in two years.
Lynden 'Trevor' Heaven, Hugh Coore, Errol McGaw, Junior Williams and Trevor Barnes are equal partners, each holding 180 shares in Future Energy Source Company Limited or FESCO, which was incorporated in February 2013.
FESCO joins a market that has no fewer than 17 marketing companies. The five partners, who together own six outlets, are themselves dealers for large players but are rebranding their holdings as those contracts expire.
Heaven owns one station that previously wore the Texaco brand operated by GB Energy Jamaica. His Mandeville service station has already been rebranded as FESCO.
Coore also operates two gas station outlets, one under Texaco's marquee, and one that was previously Unipet but is now a FESCO outlet.
McGaw was a Petcom dealer. He first rebranded to PetroMac but is now in the FESCO network, while Williams and Barnes each own one station. Negotiations to exit their current arrangements are ongoing.
"With the help of our nationals, we are seeking to build out the brand over time and we are seeking to maintain the confidence of the Jamaican motorist to build out this brand that we call our own brand," said Coore, the vice-chairman of FESCO.
Coore was not forthcoming on the level of investment by the partners, but said that while each station owner would absorb the cost of rebranding and outfitting their operations, FESCO would seed the capital investment.
"FESCO upfronts the initial costs and, through an arrangement with the retailer, that cost is defrayed such that the retailer owns the pumps, signage and equipment over time - thus empowering the retailer," he said.
The company's yearend target of 10 gas stations would still put it well behind big and medium-size networks such as Texaco, Rubis, Total, Petcom, Cool and Epping, whose individual networks range from 20 to 50-plus service stations.
The company, armed with a licence from the Ministry of Science Technology, Energy and Mining, will buy its fuel supplies directly from the Petrojam refinery and distribute to Fesco stations using its own fleet of trucks, he said.
The marketing company is required to maintain refinery purchases at an undisclosed level; otherwise low volumes would threaten their licence, Coore said. He said, so far, volume targets set by Petrojam have been exceeded.
FESCO Limited operates from Parasio Avenue in Kingston. Its board comprises Heaven as chairman, Coore as vice-chair, McGaw as treasurer, Williams as secretary and Barnes as director in charge of human resources.
The four Fesco-branded stations operate from Stony Hill in rural St Andrew; Angels/Walks Road, St Catherine; Manchester Road, Mandeville; and Porto Bello in St James.
Angels and Mandeville opened for business last November, Stony Hill in December and Porto Bello in January. Coore would not be drawn on other locations, saying that such announcements would await the expiration of existing contracts and the tidying up of other outstanding business matters.
To build out the network, FESCO is targeting independent retailers who are free to sever ties with their traditional marketing companies. Each new partner may be offered an equity stake in FESCO Limited but that is subject to negotiation and will be dependent on the assets that station owners bring to the table.
The sometimes antagonistic relationship between retailers and source of several showdowns, and is the backdrop against which the FESCO partners have branched out on their own. At the centre of the industry dispute is the vexed question of margins taken by the established marketing companies as they direct the movement of product from the refinery to the pumps that operate under their brands.
FESCO is attempting to position as a different type of marketing company - where a gas retailer in its network is allowed to benefit from the ex-refinery price of fuel supplied.
"Our strategy is to pass on the profit to the retailers. What we retain for our margin is just for the operation of the company and to assist in building out the brand. So, where possible, we are passing on most of the margins to the retailers," Coore said.
For the time being, FESCO relies on the additives provided by the Petrojam refinery, but is negotiating with a supplier to develop its own additive. The company will also be rolling out its own line of fuels and lubricants.
As a retailer, FESCO has been stressing its '100 per cent indigenous' roots.
"We are a 100 per cent Jamaican-owned marketing company. We have no foreign ties, so whatever support we get from motorists (means) you are supporting the local economy, where you have to live and do business," Coore said.
"We are offering a favourable experience at the locations by developing a brand that is attractive and pleasant to the motorist and we expect to stand behind the brand by virtue of our knowledge and experience. We are here to support the Jamaican gasoline retailers and the Jamaican economy."