JUTC hunts fix for fuel problems

JUTC hunts fix for fuel problems

Senior staff reporter

Thursday, January 21, 2021

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Head of the Jamaica Urban Transit Company (JUTC), Paul Abrahams, says the entity is trying to fix its fuel problems, while steering clear of solutions that would see its depots effectively becoming gas stations.

“The ideal situation for the JUTC is not to receive product, not to dispense product but to have an entity that will do everything and all [we] do is pay for what goes into the buses,” he said, adding that this would also eliminate the chronic problem of pilferage -- especially at its depots, which are located in volatile communities.

As Abrahams explained to Parliament's Public Accounts Committee (PAC) on Tuesday, the process by which the JUTC currently procures fuel is untenable, and the company is therefore trying to acquire its own fuel equipment. This would then allow the JUTC to go to tender for the supply of fuel at its depots. However, the facilities now being used by the JUTC are owned by petroleum marketing companies, which have refused to sell their equipment to the bus company. The JUTC's efforts are also being hobble by the presence of mostly obsolete infrastructure at these locations, Abrahams said.

His comments were made when the management of the JUTC appeared before the PAC to answer questions about the net accumulated shortage of over 231,222 litres of fuel between 2014 and 2019, as outlined in the Auditor General's performance audit of the company in July 2020. The fuel was valued at some $36.5 million.

“If you go to tender and one entity already has infrastructure [at the depots], [another] entity having to put that infrastructure in could not compete because that just means they would give you a cost for the fuel and [re]use their existing facility,” he explained.

Abrahams said one of the challenges is that the equipment would have to be removed, which would require major physical disruptions to the plants. The company is now seeking advice from the National Environment and Planning Agency on putting in above ground tanks.

He told the Jamaica Observer, however, that entering into this type of operation could present more challenges for the State-run bus company, forcing it to deal with matters such as haulage, for example.

“We want to get out of the fuel business, not get back into it,” he said.

The lease and supply arrangements which the JUTC had with marketing companies since 2000 — and the State-owned Petcom in 2015 — ended due to the bus company's poor payment history.

“They're no longer interested to sell to the JUTC because of a payment issue stemming back for many years. It's been a roller-coaster issue for the JUTC to manage and keep up with its payments for fuel... It's something that we have had to grapple with for many years. Our payment structure has been slow and the volume of funds involved does tend to create a problem when we can't make the payment at the time,” Abrahams said.

The company now spends $30 million on fuel per month for its fleet. That figure used to be $50 million prior to the COVID-19 health crisis that has seen adjustments to its operating schedule.

Abrahams said the company could look to purchase fuel directly from Petrojam but noted that this would present a problematic haulage component.

According to the auditor general, fuel purchases represented JUTC's single largest expenditure, valuing $2.5 billion for financial year 2018/19, one billion more than in 2014/15.

The report noted that there was no fuel inventory management, with records for the five years reviewed showing significant variations in fuel inventory levels across all depot locations. Its Portmore depot accounted for approximately 55 per cent of the net accumulated shortage and JUTC failed to properly account for the fuel variations recorded in its reconciliation reports, Auditor General Pamela Monroe Ellis reported.

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