Petrol station forced to close as supplier insists on payment of outstanding rent

Minister of Energy Kerrie Symmonds is to get to the bottom of a dispute that has forced the closure of one of this country’s longstanding petroleum service stations.

He told Barbados TODAY on Monday he has first to be briefed by his officers on the matter and then meet with the parties involved before he is able to speak with any authority on the issue.

However, president of the Petroleum Dealers Association of Barbados Aldo Ho-Kong-King disclosed that the standoff involves the local dealer of the Esso Service Station on Tweedside Road, St Michael and the Sol Group.

The Esso and the Sol gas stations are majority-owned by Parkland Fuel Corporation, Canada’s largest and one of North America’s fastest-growing independent suppliers and marketers of fuel and petroleum products, and a leading convenience store operator.

Ho-Kong-King said the current problem, which has resulted in the petrol station not being supplied with gas, dates back two years.

“The crux of the matter is that the local Esso dealer’s rent was increased just before COVID and his volumes had gone down in the station. He asked Esso to justify how they could increase rent with falling volumes, which they never did,” he told Barbados TODAY.

“He worked out how much he was paying per litre on average before and he said he will continue paying that…not having a proper contract in place, which many of the Sol and Esso dealers do not…. They are going on old contracts they just follow from year to year.”

Ho-Kong-King claimed that during COVID, there was no rent relief from Esso. In fact, he said, the petroleum company wanted to increase the amount substantially, which the dealer refused to pay “and continued to pay them, with continuing falling volumes, based on how many litres he was selling”.

“He had been in negotiations with them to pay additional rent for 2020 which they agreed on but he, from the beginning, told them he wanted agreement on everything. They would not agree on the 2021 [rent] and what they would do moving forward because they wanted this increase which he asked them to justify. They completely refused to justify where they were coming up with this massive rent increase from and as far as they billing him, he is not paying it,” the spokesman for the petrol dealers said.

He explained that the dealer who is on a cash-basis pay arrangement for the purchase of fuel has to give Esso the money before it delivers the petrol.

“They send him a proforma invoice, he pays for the fuel, and then once they see it in their bank account they deliver it the next day. Last week, he paid for fuel that was to come on Friday and they did not deliver the fuel. No explanation, nothing. They gave him up to the 22nd [April] in writing as a deadline to pay all outstanding rents. So, that is where the situation is at this stage,” Ho-Kong-King continued.

Management of the Esso Service Station publicly apologised to customers for the current shortage of gasoline, diesel and kerosene, explaining that it had paid the marketer for the order on April 14, but it had not been delivered as of April 20.

“We are currently in rent negotiations with the marketer. The marketer has determined that despite significant reductions in industry volumes related to the ongoing pandemic, and no improvements being carried out on the station’s infrastructure for several years, they have demanded a significant rent increase,” management of Tweedside Esso Inc. stated in a statement placed in the media recently.

“We have asked the marketer for justification of the increase of which none has been provided.”

The Esso management noted that gas station dealers receive a fixed margin per litre for fuel, of which a significant percentage is paid to the marketer in the form of rent.

“While there are no caps on what this percentage is, under the original marketers, Esso Standard Oil, we have always been able to reach agreement on rents which allow for a reasonable return on investment for both parties,” it said, adding that the original arrangement also enabled the outlet to provide good compensation packages for dedicated employees who have given high standards of service to loyal customers for years.

In response, General Manager of Sol (Barbados) Limited Roger Barrow said on Monday night that since 2020, Sol has actively worked with the service station’s management and done its due diligence to collect rent arrears.

“Sol temporarily reduced the rent to the site (prior to the pandemic) when roadworks were conducted on Tweedside Road, where the service station is located,” he told Barbados TODAY.

“After the road works had been concluded, the rent restoration was deferred due to the pandemic. This was in line with the pandemic relief Sol offered to all its dealers who also received discounts on their rents in 2020 and 2021.”

But Barrow said that as market conditions improved, Sol had worked with its dealers to revise rents.

“Unfortunately, the Tweedside dealer has been in arrears on the rent since 2020. As this matter has been drawn out over a protracted period, and while in recent days we have received a partial payment, Sol has had no choice than to hold on delivery of products until Tweedside Esso Inc. pays the outstanding rents due for 2020, 2021 and 2022 in full.”

The service station remained closed up to Monday. emmanueljoseph@barbadostoday.bb