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Tuesday 12 November 2019
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Petroleum dealers: Cut electricity costs for CNG

Minister of Energy Franklin Khan.
Minister of Energy Franklin Khan.

The Petroleum Dealers Association (PDA) has called for an adjustment of electricity charges for dispensing compressed natural gas (CNG) at service stations, saying the cost could be as high as $10,000 a month. Unless the cost is reduced, they said some dealers might have to consider pulling out of the business.

In a media release yesterday, the PDA called on the Minister of Energy and Energy Industries to “intervene and remove the specific electricity charges” for dispensing CNG. The PDA noted that the ministry had said earlier in the year that the current CNG programme provides $2 billion in funding for the CNG initiative.

The association said the funding was designed to cater for the construction of new stations, public education and marketing, providing mobile CNG stations, expert and technical support and a radio frequency identification system.While there was also a further incentive, to supply CNG kits free of charge , the missing component, it said, was the “unique costs associated with dispensing CNG to the motoring public, a cost entirely borne by CNG operators.”

The PDA argued, “CNG equipment requires (the) industrial rate of electricity and attracts a demand charge of approximately $10,000 per month. "This charge is non-existent for the supply of liquid fuel.”It said discussions with various ministers and government officials for the past four years had not been encouraging, and the situation was exacerbated when government granted a five-cent increase while simultaneously increasing the price at the pumps, the Business Levy and Green Fund Levy in 2017.

“The impact of these actions was to maintain the industry’s unsustainable price structure.”The dealers said at present, they earned on average "as low as $2.50 per $100sale at the pumps, from which they are expected to pay employees and all other expenses. CNG operators simply do not achieve enough volume to pay for the industrial electricity and the employees who are required to dispense the product.

“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.”

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