The medium, small, and micro enterprises (MSME) have traditionally been the driving force of our economy. More than 98 per cent of businesses in our country fall within this group - a group whose individual businesses hire fewer than 50 employees. Each gasolene retailer falls in this category. The MSME Alliance must be a part of the solution to our country's economic and social problems as it reaches the unsung heroes - the small entrepreneurs - collectively contributing billions of dollars to the economy.

Collective input

With this in mind, I seek the support of the media to expose deleterious issues affecting the trade, inequities and the general relationship among the stakeholders. I will recommend solutions and hope that the collective input of all will serve to alleviate the suffering now and in the future.

There are three fundamental issues of concern at this time:

1. Marketers in the retail trade

2. the E10 roll-out, and

3. a gas tax.

There is considerable concern about marketers leveraging wholesale prices at the retail end. They use the benefit as wholesalers to out-sell franchise retailers of their own brand and that of other brands. In times of shortages due to any form of upset or dislocation in supply, these marketers will make several deliveries to their own retail outlets whilst denying the franchise retailers. This was evidenced by several retailers being out of fuel for up to four days whilst other, marketer-operated sites received up to three deliveries during the same period. Additionally, franchise retailers are billed at a higher level in order to subsidise locations in price competitive zones.

I recommend divorcement, in that, wholesalers do not meddle in retail, thus guaranteeing equity and a level playing field for marketers and franchise retailers alike. If this is not done, there will always be conflict and discord in the trade, as marketers with deep pockets bully weak individual retailers.

E10 Roll-out

Whereas there is significant benefit to country and motorists, the introduction of the Ethanol Blend in Octane 87 fuel, has been erratic and troublesome, to say the least. Only Chevron/Texaco, Petcom and Unipet came on board in any significant way at introduction. As acceptance took a foothold, all other brands have 'bought into' the product, spreading beyond the original eastern end of the island to the entire country. In the meantime, the energy ministry and Petrojam seem unprepared and incapable of meeting the demand. As demand has steadily grown, nothing has been done, to date, except to change a pump, slightly improving the capacity to meet this demand. In addition, nothing has, to date, been reported on the construction of additional capacity in Montego Bay to serve western and central Jamaica.

The inability of Petrojam to meet the demand has caused major stock-outs every week, deliveries as late as 3 a.m. and unrest among retailers, tanker drivers and contractors. There are complaints of long hours waiting for deliveries, leading us to question the safety of such operations and the undue unsafe exposure of the retailer and drivers.

There has been no voluntary communication to the market on the status of the roll-out, which was set to be fully implemented April 1(a good day!?) - most in the trade have been left guessing. At a meeting with Minister Clive Mullings two Fridays ago we were advised that there was to be a doubling of the loading capacity for E10 at the expense of standard octane 87 within eight weeks. In addition, there are several options being pursued in the west in order to adequately serve that side of the island.

Gas Tax

In light of the foregoing, until adequate infrastructure is in place, tested and certified, I recommend that the ministry suspend further roll out of E10 until the infrastructure in Kingston and Montego Bay is improved.

I believe I speak on behalf of all retailers when I say we will not support an imposition of taxation on gasolene. It means increased capitalisation and an additional burden on motorists and retailers. As our disposable income decreases due to a downturn in business, unemployment, reduction in the value of the Jamaican dollar, reduction in remittances, coupled with increased cost of living, a further tax on fuel will cause increased input in the overall cost of all goods and services and will further aggravate an already intolerable challenge for the least among us.

There are other opportunities that can reduce, or indeed eliminate, the need for a gas tax:

1) All marketing companies bill their retailers for fuel loaded at ambient temperature, usually at say 90F, whilst Petrojam bill these marketers for the same fuel at the internatio-nally accepted standard for custody transfer - 60F. This translates into a credit to the marketer of approximately 1.5 per cent of the cost of the fuel - a credit of an estimated J$900 million in 2007, J$2.5 billion in 2008 and a projected income of over J$1.5 billion in 2009, assuming fuel remains at a price of J$50.00 per litre to the trade.

2) Should Petrojam or the PCJ be allowed exclusivity for the importation of all crude and refined products into the island; sell to the marketers and end-users at a small mark-up above their handling cost; then this is projected to generate an additional J$600 million.

To this end, I recommend that the Government mandates PCJ/Petrojam to pay over this rebate to the Ministry of Finance for road works and budget support, instead of introducing a tax on gas, or use these funds to subsidise such a tax.

Additionally, the Government should effect the necessary policy changes, making the PCJ the sole importer of crude and refined products, except for imports by the Bauxite Companies.

It is my wish that these recommendations will be given some thought to the benefit of all concerned.

L. D. (Trevor) Heaven is president of the Jamaica Gasolene Retailers Association (JGRA). Feedback may be sent to heavent@cwjamaica.com or columns@gleanerjm.com.