COVID FEARS

COVID FEARS

Retailers face 'corona' fears

By Balford Henry
Observer senior reporter,
balfordh@jamaicaobserver.com

Friday, April 10, 2020

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A week ago, falling oil prices seemed to be the main issue for service station owners. However, their focus have been shifted to the devastating effects the novel coronavirus disease (COVID-19) is having on the sector.

President of the Jamaica Gasolene Retailers Association (JGRA), Gregory Chung told the Jamaica Observer's weekly Auto magazine that petrol sales have fallen by almost 50 per cent since the global pandemic reached local shores.

The falling sales is because — while the petrol prices have begun to fall, starting with a $4.30 cut by local refinery, Petrojam — the increase in curfews and the reduced commuting are depleting their revenues.

The paradox is that the main arguments heard recently coming from the Opposition People's National Party (PNP) and the Jamaica Public Service is a need to slash taxes on petrol, while it has become evident now that the biggest threat to the service station owners the effort to reduce crowds and unnecessary social interactions which can spread the coronavirus.

Removing the gas taxes, or reducing them is very unlikely at a time like this, after the Government has already slashed General Consumption Tax by 1.5 per centage points costing some $14 billion, and pegged to it a $10 billion COVID-19 support programme as well as a $25 billion stimulus package.

It is obvious that the Government is more worried about tinkering with the petrol taxes, and the pricing mechanism which has kept things relatively stable despite the constant cries about the level of taxation on petrol.

Minister of Science, Energy and Technology, Fayval Williams, says that it is really a long story.

She told Kalilah Rynolds' Taking Stock recently that the pricing formula that Petrojam uses calculates has been in existencesince about 1988, and continues to favour stability over volatility.

“If you look back at the history of prices at Petrojam, when oil prices are rising, our prices nationally don't rise as fast and similarly when they are going down our prices here don't go down as fast,” she said.

She added that these are the two things in the mix that have ensured stability and less volatility.

She said that in recent months her ministry has sought the assistance of the International Monetary fund's (IMF) in doing technical analysis to have a look at the pricing formula to see if it still serves Jamaica's needs.

She added that the IMF is still working on it and there has been some preliminary assessments already done by the Fund, which she regards as an expert in oil policies, globally, and is hopeful this will be done within a month.

But, while the petrol/travelling sectors continue to await the outcome, the threat of sales dips as deep as 50 per cent in the revenues of the service stations has become a growing fear among those involved, and will also require the minister's intervention.

The JGRA's president says he will be seeking audience with Williams soon, to explore issues affecting the petrol retail sector soon.

According to him, petroleum sales volumes have dropped by more than 50 per cent across the industry, as dealers struggle to stay afloat. However, his association continues to give 100 per cent backing to the government's efforts.

“It's a painful time for all of us and gas station dealers have seen upwards of 50 per cent decline in their volumes, and they're facing dire consequences. The association is concerned about what's happening,” he told the Observer.

But, he accepted that restrictions imposed on almost all activities across the society are underpinned by the need to ramp up social distancing, and he has urged all Jamaicans to follow the rules laid down by Government, as the sooner the country emerges from the stranglehold of COVID-19, the better it will be.


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