Gov’t Considers Linking Petcom to Petrojam

The Government of Jamaica (GoJ) is considering linking the Petroleum Company of Jamaica (Petcom) to PetroJam in order to improve the attractiveness of the Petrojam Refinery to investors under the PetroCaribe initiative.
The consolidation of the two companies would mean that Petcom is no longer being considered for divestment. In fact, as noted in a Ministry Paper tabled in the House of Representatives on Wednesday (June 1) by Commerce, Science and Technology, Phillip Paulwell, estimates suggest that government would not realize much from the divestment of Petcom, as the company’s net worth was low.
Turning to the company’s performance in 2004/2005, the report said even while the divestment talks affected production targets, market share at the end of the fiscal year stood at 12 per cent; total product sales were approximately $1.06 million barrels; retail sales were approximately 543,000 barrels and land sales were approximately 385,000 barrels.
Liquefied petroleum gas (LLG) registered sales of approximately 131,000 barrels, representing a 15 per cent share of the LPG market and lubricant sales were approximately 3,500 barrels. In respect of income from sales, the report said that the company earned $5.4 billion and net operating income was estimated at $63.65 million. Net profit after tax was approximately $43.054 million.
There was also an 86 per cent improvement in the company’s overall profitability, from $25.690 million in 2003/2004 to an estimated $43.064 million in 2004/05.
Meanwhile, numerous programmes and targets were outlined in the report for the 2005/06 fiscal year, including the expected growth in overall sales volume to 1.096 barrels representing a three per cent increase over the previous period, and a 12. 4 per cent increase in market share.
Also targeted is a 5.66 per cent growth in retail volume to achieve approximately 573,700 barrels in sales, reflecting a market share of 11 per cent; growth of 7.86 per cent in LPG sales to 14,117 barrels to increase market share to 16 per cent; and a 69 per cent increase in lubricant sales to 5,992 barrels, to push market share from three per cent to five per cent.
The company is also targeting an overall sales income of $5.5 billion; gross profit to $514.9 million; and net profit of $61.8 million.
Other targets outlined are the addition of five service stations and two LPG plants; the restructuring and strengthening of the LPG and lubricants departments with the goal of increasing efficiency in product and sales delivery and a reduction in the company’s overall operational break-even levels, with a view to reducing expenses in all areas. The company will also look to review and modify the re-launch campaign to improve its brand image performance and its financial viability.