Pe­tro­leum in­dus­try in chaos

Jamaica Gleaner - - IN FOCUS - Howard L. Hamil­ton is the for­mer head of the Shell Com­pany (WI) Ltd. and is cur­rently the ex­ec­u­tive chair­man of Pet­com. Email feedback to col­umns@glean­

THE RE­CENT ex­plo­sion at an il­le­gal gas-fill­ing plant on Jac­ques Av­enue in the Moun­tain View area has once again high­lighted the un­reg­u­lated na­ture of the pe­tro­leum in­dus­try.

The il­le­gal gas trade has been an on­go­ing prob­lem for quite a num­ber of years. A re­cent ar­ti­cle by Ryon Jones in The Sun­day Gleaner of Novem­ber 6, 2016, was most re­veal­ing. He re­ported that there are more than 100 il­le­gal gas-dis­tri­bu­tion points in Kingston and St An­drew alone. The po­lice need to be more vig­i­lant in iden­ti­fy­ing these il­le­gal op­er­a­tions, take the ap­pro­pri­ate ac­tion to close them down, and ar­rest the per­pe­tra­tors.

The min­is­ter of sci­ence, en­ergy and tech­nol­ogy, Dr An­drew Wheat­ley, is con­scious of these op­er­a­tions and has stated: “The new reg­u­la­tions com­ing will make it more dif­fi­cult for per­sons who op­er­ate il­le­gally ... . The ex­ist­ing leg­is­la­tion needs strength­en­ing, and new leg­is­la­tion needs to be put in place to pro­tect the chain of pe­tro­leum prod­ucts.”


He also said that a spe­cial in­spec­torate would be es­tab­lished and have in­ves­tiga­tive pow­ers to erad­i­cate the il­le­gal gas trade.

The ‘lib­er­al­i­sa­tion’ of the pe­tro­leum mar­ket has come with­out the proper in­spec­torate and en­forced reg­u­la­tions. A to­tal re­vi­sion of this as­pect of the in­dus­try is needed ur­gently. When the mar­ket was con­trolled by the multi­na­tion­als – Shell, Esso and Tex­aco, there was an im­per­a­tive that in­ter­na­tional stan­dards be main­tained. We were sub­jected to reg­u­lar safety and en­vi­ron­men­tal au­dits, and quar­terly re­ports were manda­tory. Now, ev­ery Tom, Dick, and Harry can get a li­cence to mar­ket and im­port pe­tro­leum prod­ucts.

It was the prac­tice then that only com­pa­nies with the in­fra­struc­ture to store, han­dle, and dis­trib­ute pe­tro­leum prod­ucts were al­lowed to im­port. That is not the sit­u­a­tion to­day, where im­porters are mar­ket­ing prod­ucts to fa­cil­i­ties that are owned by oth­ers. This has placed a se­ri­ous prob­lem on in­vest­ment de­ci­sions of some mar­ket­ing com­pa­nies. Reg­u­la­tions that are en­forced should be in place to can­cel the li­cence, not only from those who pur­chase, but also those who poach on oth­ers’ stor­age and dis­tri­bu­tion equip­ment and fa­cil­i­ties.

It is still be­yond my com­pre­hen­sion why the Gov­ern­ment is al­low­ing im­por­ta­tion by en­ti­ties other than those with the fa­cil­i­ties to store and dis­trib­ute prod­ucts. This puts the govern­men­towned oil re­fin­ery in a most in­vid­i­ous po­si­tion, es­pe­cially when it faces a shrink­ing mar­ket with one of their ma­jor cus­tomers for fuel oil (the ma­jor prod­uct pro­duced by the re­fin­ery’s hy­dro-skim­ming op­er­a­tion) now con­verted to liq­ue­fied gas. What are they go­ing to do with the fuel oil that should be find­ing a mar­ket in the ex­pand­ing bunker­ing trade now con­trolled by in­de­pen­dent im­porters? Is this the case of the right hand not know­ing what the left hand is do­ing?

On the sub­ject of im­por­ta­tion, my time at Shell is still re­mem­bered by the un­savoury Shell waiver scan­dal, which was a cre­ation of the me­dia. There was no at­tempt at proper in­ves­tiga­tive re­port­ing, which would have re­vealed that all im­porters of pe­tro­leum prod­ucts, in­clud­ing the govern­men­towned re­fin­ery, were sub­ject to a tax.

The im­porters sought, and re­ceived, a waiver of these taxes each time they im­ported. In fact, this was a la­bo­ri­ous, time­con­sum­ing process achiev­ing noth­ing. The World Bank and the In­ter­na­tional Mon­e­tary Fund in­sisted that the tax be re­moved. This was even­tu­ally done af­ter the fi­asco of the Shell waiver scan­dal.


You will re­call that both the min­is­ter of fi­nance and the min­is­ter of en­ergy re­signed in dis­gust at what was be­ing por­trayed po­lit­i­cally. In the case of the min­is­ter of fi­nance, who was then deputy leader of the party, this was a par­tic­u­larly un­pleas­ant pe­riod since in­ves­ti­ga­tion would have re­vealed that his res­ig­na­tion had noth­ing to do with the im­por­ta­tion by Shell.

Pow­er­ful in­flu­ences con­vinced the ail­ing and soonto-re­tire leader of the Peo­ple’s Na­tional Party and prime min­is­ter, Michael Man­ley, that this was an ex­cel­lent op­por­tu­nity to get rid of his deputy since “he could not al­low the le­gacy of his fa­ther, Nor­man Man­ley, to pass

to Pat­ter­son and his black mafia”. This was an ab­so­lutely dis­gust­ing, dis­taste­ful, and prej­u­di­cial act.

I re­mem­ber some months af­ter, con­fronting Michael Man­ley at a din­ner and ask­ing him why he had done what he did. His re­ply, even more dis­taste­ful, was: “Pol­i­tics, my son. One day you will un­der­stand pol­i­tics.”

May I rec­om­mend our jour­nal­ists to see the movie Spot­light. then they will un­der­stand the power of proper in­ves­tiga­tive jour­nal­ism.

Given the im­por­tance of the pe­tro­leum in­dus­try to the econ­omy, and the var­i­ous chal­lenges be­ing faced by lib­er­al­i­sa­tion, there must be a struc­tured ap­proach that will en­sure pro­fes­sional con­duct of all stake­hold­ers.

The de­vel­op­ment and en­force­ment of na­tional pe­tro­leum safety stan­dards are an im­per­a­tive. The Gov­ern­ment has to pro­mote and en­force full reg­is­tra­tion of all in­dus­try par­tic­i­pants.

Pro­fes­sional au­dits must be in­tro­duced to make sure that each im­porter and mar­keter ful­fils the terms and con­di­tions of his li­cence, cer­ti­fi­ca­tion, and/or reg­is­tra­tion com­men­su­rate with ideals of fair­ness and trans­parency.

The Gov­ern­ment must in­sist on the De­vel­op­ment of ini­tia­tives that en­sure the evo­lu­tion of an in­dus­try that is more ef­fi­cient, ef­fec­tive, and eco­nom­i­cally vi­able, in keep­ing with the na­tional de­vel­op­ment goals.

Howard Hamil­ton


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