GB Energy halts expansion in Jamaica as top brass huddle

T he top brass at GB Energy, the Dominican Republic-based company that operates Texaco gas stations, flew in for meetings at the top of the week as the company weighs plans to delay capital projects while the local economy recovers.

General Manager of GB Energy Jamaica, Bela Szabo, said the visit was a routine one that was five months overdue, but declined comment on what the discussions covered.

He said, however, that projects previously touted by the company are on hold and won’t be revisited until 2022, but declined to cite them, saying other partners were involved.

“Every year we review our investment strategy, but the feeling is that right after we fully recover from the pandemic that we will have the capacity and the appetite for the sort of expansion that we saw before,” Szabo told the Financial Gleaner after the meeting with regional bosses.

GB Energy acquired the Chevron Texaco downstream operations in Jamaica and the Dominican Republic in November 2012, along with an exclusive licence to operate in 14 other Caribbean territories. Its network in Jamaica encompasses 70 Texaco service stations. The company also has a number of industrial accounts, as well as significant market share in aviation fuelling supply, Szabo said.

Sources say GB Energy’s regional operations were hard hit by COVID-19 travel restrictions. More than 35 per cent of the company’s total revenue comes from aviation fuelling supply with operations at Jamaica’s two international airports, along with the Dominican Republic and others of 15 countries in the Caribbean region.

Confirming the numbers, Szabo said that while volumes in the aviation sector have decreased significantly, there are signs of recovery.

“At the beginning of the pandemic, we lost a substantial portion of the volumes normally sold, but that is now back up to the extent that we should recover by the end of the year, and we’ve managed our relationship with customers enough to increase our market share,” the GB Jamaica manager said.

Pre-COVID, he added, GB Jamaica supplied about 40 per cent of the aviation fuel market in Jamaica but, despite lower volumes, that share has increased to 60 per cent. He declined to comment on volume sales, but said perennial curfews and lockdowns and the consequent decline in people and vehicular movement have curtailed fuel consumption.

Szabo says Texaco, like many marketing companies in Jamaica, suffered from the decreased consumption, but is bouncing back.

“COVID-19 has put a damper on all companies here, but we as a company have managed the transitory tightness with very good results at this point,” he said.

World Data Atlas puts Jamaica’s daily fuel consumption in 2020, including gasoline, diesel and industrial, at 5.565 million litres during February, a month before the full onset of the COVID-19 pandemic. Consumption plummeted to 2.385 million litres per day by April of last year before levelling off at about 3.18 million litres per day between June and August.

The fuel market is served by just under 20 marketing companies, with TotalEnergies, Rubis, Texaco, Petcom/Phoenix and Jampet/Unipet being among the top players.

On the question of GB Energy’s stock of debt, Szabo said, being a private company, they would not disclose their leverage, but noted that steps were taken to rebalance the business.

“Yes, there were cash-flow problems due to the volume loss arising out of the pandemic. We took corrective measures regarding those things that were within our power,” he said.

“We put a temporary hold on planned investments and, indeed, all the measures that any normal company would do under the circumstances of a 100-year event such as the COVID-19 pandemic.”

During the pandemic, GB retained 100 per cent of its employees in Jamaica and did not introduce any salary cuts, said the GB Jamaica GM, but regarding the 16 of the 70 Texaco service stations owned by the marketing company in Jamaica, Szabo confirmed that GB Jamaica is looking to divest the real estate assets of some locations.

The plan is causing disquiet among some of its dealers, but the company is pitching it as an opportunity for them.

“From time to time we offer ownership opportunities to some dealers. We are actively pursuing that at this time. We are prepared to negotiate, to the extent that we can achieve a win-win for both sides,” Szabo said.

Declaring that GB Energy is in Jamaica for the long haul, he added that the sale of the assets represents the company’s continued shift towards partnering with local entrepreneurs in marketing Texaco products.

neville.graham@gleanerjm.com