By Lavern Clarke, Staff ReporterDESPITE ONGOING efforts, the authorities have been unable to tame what seems to be a growing underground trade in gasolene, while the formal stations lose out on millions of dollars in revenue.
The legitimate operators say they are hurting, but are reluctant to comment on the figures that would quantify the problem.
However, for just one of the large players in a sector that has a total population of some 300 gas stations islandwide, the black market is taking an annual US$800,000 ($47 million) bite out of its earnings, according to Conroy Watson, senior director of energy in the Ministry of Commerce, Science and Technology.
The Ministry has had little success in getting reports from others, but "the illegal stations are making a dent in the system," Watson told Wednesday Business. And they continue to thrive because the nature of their set up allows them to elude the authorities.
"They're a shifting target," he said.
Based on 2002 gasolene per barrel consumption figures published by the Petroleum Corporation of Jamaica, Wednesday Business calculations show that Jamaicans consume an average 1.97 million litres of unleaded gasolene per day, based on estimates of 159 litres per barrel.
Based on current market prices, loosely averaged at $30 per litre for both octanes, daily revenues from unleaded supplies approximate $60 million.
A.D. 'Bunny' Hobbins, deputy chair for the energy policy committee of the Private Sector Organisation of Jamaica (PSOJ), says the industry has no real indication of how much gasolene ends up in the wrong hands, hence the difficulty in assessing the dollar impact.
The side activity - which also carries a heavy public safety risk both from contaminated supplies and the risk of exploding gas - has got both private players and the authorities taking on the role of sleuths to track illicit deliveries, find the illegal pumps and shut them down.
Hobbins, who is also chairman of United Petroleum (Jamaica) Limited (Unipet), a nine year old company which operates eight gas stations, says the industry's attempt at policing itself has not been very successful. Gas stations are encouraged to report shortages at delivery, but too often, he said, there is a lag in the filing of the complaint, by which time the tanker might have left the scene.
"It's either the underground dipstick that's not accurate, or the truck that's not accurate," he said, adding that a proper investigation would have to cover both.
PCJ also has special security personnel to monitor the system, which includes tracking down trucks and trailers, but there is heavy dependence on the police to carry out the raids.
Last year, the police had stepped up action against illegal gas peddlers, but the Constabulary Communication Network, while noting that the operations were mainly in the South St. Andrew zone, said Tuesday that it was unable to quantify the arrests as there were no dedicated figures on the operations.
The petroleum trade is supposed to be heavily regulated, and under the systems set up, leakage of gas supply to underground traders seems near impossible.
The law requires that dealers be licensed to trade, and haulage contractors and their truck drivers be licensed to transport. Hobbins says the truck drivers go to the refinery with supply orders, and the trucks are sealed after filling.
Jamaica Gasolene Retailers Association president, Lloyd 'LG' Brown, says that while the state refinery uses a metered supply system, dealers who are in turn supplied by the marketing companies face two difficulties - measurement problems persist as some trucks are still not calibrated; and the marketing companies use an "archaic" measure, called a T-bar, to check that the trucks are delivering the correct supplies.
The T-bar measures the empty space from the top of the tanker to the liquid inside it, and allows for a 0.5 centimetre error in the reading.
Nothing, he says, stops the truckers from skimming to the allowable level, which in a small truck represents some 10-20 gallons, but can amount to 200 gallons in a large truck. The JGRA, he said, is lobbying the Bureau of Standards to come up with legislation that stipulates a metering and calibration system.
Watson also suggests that part of the problem is that the legal and the illegal side sometimes collude; and some gas stations were "careless" about ensuring that none of its order went back out with the truck delivering it.
"There are legal stations that are involved in illegal trade," he told Wednesday Business. "Trucks come to them with a load (they did not order) and they don't question the source."
A delivery is normally worth about $1 million, and some gas station personnel don't refuse an opportunity to buy a cheap load, he said. More than 100 trucks service the island.
Noting that those culpable were not necessarily the owners/operators, Watson added that stations also got short changed on supplies because of carelessness. "Supervisors might sign for 10 (gallons) and get nine. Too often they don't check that all the load is out." Hobbins too had hinted at the latter, noting that it was up to the various concessionaires to monitor their deliveries.
But Watson also admitted that the problem persisted because the Petroleum Quality Control Act was largely a tiger without teeth.
The law requires that all handlers of gasolene be licensed, but not everyone is, he said, adding that it was partially an issue of insufficient resources to get the job done.
The Ministry is currently engaged in a situational analysis of what it will take to "fully effect the law," he said. "We are coming close to making it bite."
Meantime, lower than expected world supplies of crude have pushed up oil prices in the past few weeks, with a corresponding rise in gas prices. Reference prices for 87 octane and 90 octane have both risen 18 per cent between January 2 and August 14.
Asked if the product price might inadvertently be fuelling the black market where prices are lower, Hobbins said that while the motoring public might consider the prices high, the dealers had margins to maintain to finance operations.
He adds that the sector has been holding its dollar margins constant, but that they have declined in percentage terms - ostensibly because the value of the dollar has eroded.
The margins are currently at 6-10 per cent, he told Wednesday Business, except for small stations in rural communities which go higher than the 10 per cent to compensate for higher operating costs.
