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Monday 27 January 2020
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ALL OUT ATTACK

Unipet: Govt using strong-arm monopoly tactics

Unipet gas station on the Eastern Main Road, Morvant, - ANGELO MARCELLE
Unipet gas station on the Eastern Main Road, Morvant, - ANGELO MARCELLE

AN all out attack!

This is what independent fuel retailer Unipet is claiming as it accused state-owned Paria Fuel Ltd of using its monopoly in the petroleum marketing sector, to inflict more punishment and hardship on it, although Government is fully aware it has been tardy in making fuel subsidy payments.

In documents filed in the High Court on Friday, in support of its judicial review application and injunction application, Unipet chief executive Dexter Riley set out the company’s dealings with Paria and its predecessor, Petrotrin. He said Petrotrin had a keen understanding and awareness of the situation and “never seriously attempted to extract its pound of flesh from Unipet.”

Unipet caters to approximately 30 per cent of the public's fuel consumption while State-owned National Petroleum (NP) serves 70 per cent. Unipet also supplies petroleum products to oil and gas multi-nationals engaged in exploration in TT.

Last Tuesday, Paria announced its decision to cut Unipet’s fuel supply because the company failed to renegotiate a supply agreement since April. It also said Unipet defaulted on payments owed for September and October 2019 deliveries. In the wake of the supply squeeze, 25 Unipet gas stations across the country were closed after its supplies were exhausted.

“Paria has had challenges receiving payment from Unipet in accordance with the agreed payment schedule; this failure to pay monies when due has the potential to affect Paria’s ability to procure fuel from its suppliers. Paria is willing to continue discussions with Unipet to achieve a solution that is both safe and in the best interest of both companies and which minimises any disruption of supply to the local market,” a Paria statement said.

Riley, in the court documents, said a solution to the dilemma is for Unipet to have a license to import fuel. “An import license will allow Unipet to establish contracts with potential suppliers that carry or have the relevant assurances, quality, quantity, and price in the interest of the local market.”

STATE OWES US

Government currently pays a subsidy as part of the price-fixing regime which enables Unipet to sell fuel at the fixed price although it pays for fuel supplied to it at higher prices. Riley, in his affidavit, said as at October 2019, the State owed Unipet $72,444,092.60 in outstanding subsidies.

The court documents said the payment of the fuel subsidy was critical to a marketing entity’s ability to pay for fuel supplied to it.

“It has been Unipet’s experience that subsidies due have not been paid in a timely, efficient or economic manner so as to enable Unipet to honour its financial commitments or obligations to its supplier which was previously Petrotrin and is now Paria,” court documents stated.

“Predictably, this had a knock-on effect on Unipet’s financial obligations to honour its payment schedules previously to Petrotrin and now to Paria,” the documents said. The company it is a private, limited liability for profit entity which received no subventions or grants from the State.

“It is therefore unfair to expect the shareholders of Unipet either to fund from their own pockets or to seek funding from some financial institution to pay Paria, when the State has habitually failed to pay the subsidy on time.

“It is not that Unipet deliberately refuses to meet its financial obligations to Paria," the company said, adding “but Unipet has been forced in the circumstances to delay payment because of the persistent delays it has experienced with Government and in particular the Minister of Finance in receiving the fuel subsidy.”

HARDSHIP FOR PUBLIC

Unipet added that the public also stands to suffer as the closure of the 25 Unipet branded gas stations across the country will be shut down and it was likely to cause mass gridlock, inconvenience, harm and damage to the public. The company also complained it has suffered major reputational damages because of the intense media blitz of advertisements and statements being made in the Parliament, which, it said, was orchestrated to bring Unipet into disrepute.

Court documents further set out that at the end of November, Unipet paid Paria $63 million, clearing its outstanding indebtedness up to the end of September, less VAT on the subsidy payments which it has not yet received from Inland Revenue Division.

“The shortfall in the payment for September, 2019 was as a result of the failure of Government to pay the VAT element of the fuel subsidy although it had paid the fuel subsidy itself. As Unipet was not in receipt of this sum, it could not pay same over to Paria."

Accusing Paria and by extension, the state, of behaving harshly, oppressive and arbitrarily in its relationship with the company, Unipet also told the court that the stoppage of the supply of fuel has left its operations severely affected.

If its supply was not restored, Unipet will suffer irreparable harm as it will be unable to remain in business, resulting in the loss of employment for over 600 people, 200 of whom are direct Unipet employees and an additional 400 are employed with Unipet’s dealers and peddling customers as well as the loss of employment at gas stations owned by Unipet’s franchisees.

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