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August 10,2020
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Wednesday 5 August, 2020

Petroleum Dealers say CNG not viable as shortage reported in South

The Petroleum Dealers Association (PDATT) is calling on the Minister of Energy & Energy Industries to remove the specific electricity charges associated with dispensing Compressed Natural Gas (CNG) and to provide the 20 cents margin to make the industry viable.

This comes as PDATT said members of the motoring public who use CNG have recently been inconvenienced by its unavailability at stations in South Trinidad.

In a statement issued on Monday night, the Petroleum Association says the current situation is unsustainable.

“CNG Operators simply do not achieve enough volume to pay for the industrial electricity and the employees who are required to dispense the product. National Petroleum Marketing Company Limited and UNIPET have been consistent in providing liquid fuels to all gas stations to ensure that Petroleum Dealers are able to serve the motoring public. Citizens expect that when they need fuel, a gas station will be open for business, stocked with the product they need and staffed by courteous staff or have the appropriate level of technology to satisfy their demand. Petroleum Dealers cannot continue to satisfy these expectations with the current margins and those in the CNG business will have to reconsider their investments. It is difficult for any industry to operate in a price-controlled situation with unsustainable margins.”

The PDATT recalled that CNG was introduced by the then Government in 2011. It also notes that earlier this year, the line Minister said the Government’s current CNG Programme provides $2 billion dollars in funding, designed to cater for the construction of new stations, public education and marketing, provision of mobile CNG Stations, expert and technical support and Radio Frequency Identification Systems. There was further incentive to supply CNG kits free of charge. This was all part of the thrust toward promoting CNG vehicles.

Still, the association says this was not enough as selling this gas comes at a high cost to the retailer.

“A missing component in the model was the unique costs associated with dispensing CNG to the motoring public, a cost entirely borne by CNG Operators. CNG equipment requires Industrial rate of electricity and attracts a demand charge of approximately $10k per month. This charge is non-existent for the supply of liquid fuel. This unfortunate and unfair situation adds insult to the current injury being perpetrated on suppliers of Liquid Fuels who are operating under an uneconomic business model.”

PDATT says for the past four years, petroleum dealers have been in discussion with various Ministers and government officials and the response has been “unencouraging”.

It adds that the situation was exacerbated in 2017 after the government granted a five cents increase while simultaneously increasing the price at the pumps, the Business Levy and Green Fund Levy.

“The impact of these actions was to maintain the industry’s unsustainable price structure. At present, Petroleum Dealers earn on average as low as $2.50 per $100.00 sale at the pumps, from which they are expected to pay Employees, and all other expenses.”

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