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Petrojam and the COVID-19 crisis
Columns
Raulston Nembhard  
April 28, 2020

Petrojam and the COVID-19 crisis

Jamaicans are understandably outraged at the revelation that Petrojam, the scandal-ridden State-owned oil importer and refinery, arbitrarily added US$41 to the ex-refinery price of fuel that it supplies to the market. This at a time when the price of oil dipped into negative territory. The price has rebounded but is still below US$20 per barrel.

With this drastic fall in oil prices, beleaguered consumers instinctively believed that they would have got a reprieve in the price they pay for fuel. They have seen in the past that there is no hesitation on the part of the refinery to immediately put up the price of their products, yet there is a snail-like pace at which there is any reduction whenever the prices fall.

Indeed, when oil prices fell from over US$100 per barrel to almost $40 there were no discernible movements downward in the cost at the gas pumps. This situation has continued apace despite the scandals of corruption at the refinery and the recommendations of the investigative review committee, led by Chris Zacca, into its operations. Almost a year has passed and there is no indication that the Ministry of Energy has moved with any alacrity in addressing these recommendations, especially the revamping of its fuel pricing mechanism.

I have long thought and written that the high cost of fuel to the consumers was related to the pricing mechanism that the refinery adopts in making the commodity available to the public. The Zacca committee found this to be so and strongly recommended that it be changed to reflect greater transparency and a more equitable formula be found in pricing this important commodity to the market. The arbitrary arrangement that spanned successive People’s National Party (PNP) and Jamaica Labour Party (JLP) administrations could no longer be sustained. But the report has languished at the Ministry of Energy.

Despite the robust recommendations of the committee, there is no indication that the ministry has moved to implement them, especially in the area of pricing. With no obvious supervision or fear of reprimand, the refinery has continued to operate as a law unto itself. But it seems to have outdone itself in this latest incident.

To add US$41 to a barrel of oil when the market is seeing fuel in negative territory was clearly an attempt at price gouging. But because they have done it like this for so many years this did not seem unconscionable to the “group” or individual at Petrojam who made this decision. Neither did it seem so to the Ministry of Energy. It was par for the course. It is clear that the general manager of Petrojam, Winston Watson, has some explaining to do. Not to mention the minister of energy.

The galling thing about the decision is that it has come at a time when the country and its citizens are faced with the burdens imposed by COVID-19. At this time of great economic austerity and hardship, every little easing of the burden helps. In a time of crisis the raw instinct in all of us is to exploit the situation for our own advantage. Sometimes this is a response to the primeval urge for self-preservation and survival, but often it is a response to the baser instinct of greed. This can happen on the personal or the collective level. It is only the truly altruistic among us who will resist this urge and aim instead for that greater nobility that finds its focus in concern for the welfare of others.

If Petrojam’s primeval urge was to profit from falling oil prices at the expense of crisis-ridden consumers, why could it not settle even for US$10 or 20? Why $41? The answer seems clear: “A nuh nutten! We have always done it like this.” The expectation is that there will be the usual gripers and criers like the Jamaica Gasoline and Retailers Association (JGRA). There will be the usual nine-day public outrage, after which we will return to business as usual. But this time around Petrojam has touched a raw nerve in the public. This one will not go away that easily. There has to be accountability. The hapless and often helpless consumer rightfully expected an ease consequent on the windfall reaped from the collapse of oil prices.

The public is understandably looking to the minister, Fayval Williams, and the Government in general to move with speed to correct this anomaly in the calculation of the price at which fuel is delivered to the public. The first demand must be for transparency. The minister must move with alacrity to put in place the recommendations of the Zacca committee, especially in the area of the refinery’s pricing mechanism.

There is talk of the divestment of the refinery, but dealing with this matter has to be done with expedition. The volatility in the price of oil on the global market will continue for some time. If no other recommendation is taken on board now, the ministry must address the revamping of this pricing mechanism, COVID-19 threat notwithstanding.

Dr Raulston Nembhard is a priest and social commentator. Send comments to the Observer or stead6655@aol.com.

ZACCA…ledinvestigativereview committeeof Petrojam
Minister of Energy Fayval Williams
Prices at the pumps have not fallen at the rate expected.
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