Appeal Court rules on NP gas licences query

THE COURT of Appeal has ruled on an appeal by the Minister of Energy and state-owned National Petroleum (NP) against the decision of a High Court judge which it said had ramifications shutting down 67 of its service stations.

In a ruling on April 23, Justices of Appeal Alice Yorke-Soo Hon, Vasheist Kokaram and Malcolm Holdip clarified the position on retail marketing licences (RML) and the law.

They allowed, in part, the appeal of Justice Avason Quinlan-Williams’ 2022 ruling in favour of the Petroleum Dealers Association (PDA) relating to the grant of an RML by then energy minister Franklin Khan to NP for a gas station in Diego Martin.

Quinlan-Williams had found the decision to do so in 2017 was illegal and therefore void.

In the appeal, the minister and NP said the judge's declaration had brought into question the legitimacy of the terms and conditions of contractual arrangements of gas stations run by dealers.

The minister and NP also argued that each dealer at the respective site would be required to obtain a retail marketing licence and while they awaited that process, the gas stations would be inoperable, which would affect the delivery and availability of fuel to the public.

The minister and NP also said it had not yet begun the retail sale of fuel at the Diego Martin fuel station, but sold as a wholesaler to the station’s operator.

Kokaram, who delivered the unanimous decision, said the trial judge was correct in her analysis of the legislation that a retailer who sold fuel to the public had to hold an RML.

However, he said the judge didn't need to invalidate the actual RML.

“While it is not for this court to trespass into NP’s private commercial arrangements with its dealers or its private business models, the nub of the complaint by the PDA concerns the legality of the retail operations in the petroleum industry under the Petroleum Act...

“With respect to the legality of the retail operations under any proposed model which will result in the sale of fuel at the petrol station by an unlicensed operator, this is a perfectly legitimate question in public law,” Kokaram said in the ruling.

Kokaram also said the Petroleum Act prohibited marketing petroleum products without a licence.

“In this case, no person can engage in retail sales to the public without an RML…Even so, while NP is entitled to engage in any business model to retail its product it must be compliant with the legislation.”

He also said while there was no statutory prohibition on NP's obtaining an RML, it must comply with the provisions of the act if it wants to engage in the retail sale of fuel.

“The fact that an independent contractor is retailing the petrol for NP does not in itself make the grant of the RML by the minister to NP as a retailer void but places an obligation on either NP to comply with its obligations under the RML and the independent contractor to secure an RML for it to lawfully retail the product under the Petroleum Act.

“Based on NP’s own admission it has sold its fuel as wholesaler to an independent contractor which does not hold an RML.

“It would be wrong for this court to ignore the realities of the sale of fuel at the fuel pumps and equally for NP to allow its premises to be used to engage in the retail sale of fuel at the Diego Martin Service Station to the public by an unlicensed operator.”

He made it clear that even though the act did not expressly prohibit contractors of a licensee ( in this case NP) from engaging in petroleum operations, did not mean they could do so without an RML.

“(There) is no free pass for NP as a retail operator to engage in retail sales by an unlicensed independent contractor.”

On the issue of the subsidy, Kokaram said NP could not, at the same time, earn a wholesale and retail subsidy. He did point out that in this case, NP did not claim a retail subsidy and was not retailing petroleum, so the RML could not be invalid on the basis it was receiving both subsidies.

On the PDA’s complaint on the publication requirements of an RML, provided for by the act, Kokaram agreed the licence was in breach of the law.

“ Parliament clearly crafted a detailed procedure to deal with notification to members of the public of the application for and issue of a licence under the Petroleum Act and to deal with any objections by any person who held rights under the Petroleum Act.”

In reformulating the declarations the judge granted, Kokaram said while she did not have to declare the RML invalid, she was correct in her analysis of the legal implications of the retail operation at the Diego Martin service station.

“The obligations under an RML cannot be delegated to an unlicensed contractor; a wholesaler of petroleum products who sells to itself or an associated company cannot claim both wholesale and retail subsidy and the minister must comply with the publication requirements of the Petroleum Act prior to the grant of an RML,” was the Appeal Court’s ruling.

The Appeal Court’s amended declarations are that retailing petroleum products without an RML is unlawful; a petroleum-products wholesaler's claiming of a wholesale subsidy for products wholesaled to itself as a retailer is unlawful; and the grant of the Diego Martin service station RML to NP was in contravention of the requirements of the act.

The Appeal Court has advised that before issuing an RML, the minister must publish notice of the intended application and take into account any objections.

Representing the minister were Douglas Mendes, SC, Vanessa Gopaul, Ryan Grant and Murvani Ojah Maharaj.

Senior Counsel Fyard Hosein, Sasha Bridgemohansingh, Aadam Hosein and Anjali Maharaj represented the PDA. National Petroleum was represented by Russell Martineau
, SC, Kelvin Ramkissoon and Gregory Armorer.