Regency Petroleum gas station rollouts hit by Customs delay
Regency Petroleum Company is smarting from delays in delivery of new equipment to open its two service stations.
The two stations, one at Paradise, near Savanna-la-Mar in Westmoreland, and the other, slated for the resort town of Negril, are at an advanced stage of readiness.
But CEO Andrew Williams says eight container loads, which arrived in Jamaica from as far back as November, are only just now being delivered to outfit the stations. The company has received six containers, with the other two still on the wharves.
The outstanding two contain fixtures and fittings for the Negril station and above-ground special tanks for the Paradise station, said Williams. The equipment would allow for remote monitoring of fuel levels and pump dispensers and is vital to the proper functioning of the new stations, he said.
For the financial year ended December 2022, Regency Petroleum reported sales of $681 million, up 12 per cent from $607 million of sales in the previous year.
The company, which listed on the junior market of the Jamaica Stock in mid-December, has been operational for four years and is in the business of selling petrol and LPG or cooking gas.
Williams is looking for revenue growth from the expanded gas station network.
Regency had projected that the Paradise gas station would have been up and running by January and the Negril station by February. But due to the delays at Customs, Williams has pushed back the commissioning dates to the second quarter.
“That time has obviously passed,” said Williams. “Based on developments and deliveries so far, we’re projecting that Paradise will be ready by April 2023 and Negril by May 2023,” he told the Financial Gleaner.
Regency gets 65 per cent of its revenue from its sole gas station at 93 Great Georges Street in Savanna-la-Mar while the other 35 per cent, up from 30 per cent in 2021, comes from commercial and domestic LPG sales. Williams is still projecting “multiples of present revenue” when the two stations come online.
He said Regency’s IPO served to raise the company’s market profile and gave exposure to the brand and that he expects the exposure to bring additional business to the new gas stations. If the company holds to its new opening deadlines, he said, Regency would meet its commitments for revenue growth.
“The projection remains, but it’s just that it has been delayed. When those stations open, we’ll have revenue from the pumps as well as the convenience stores,” he said.
Although the Regency produced improved revenue last year, its earnings fell by four per cent, from $59 million to $56 million. The CEO attributed the dip to one-off charges for the IPO fees alongside interest charges on short-term loans.
The offer of shares raised $287 million for Regency, $27 million of which was utilised to pay the cost of arranging and executing the IPO transaction.
“The cost of the IPO was significant, but in addition, there were the loans that we took prior to the IPO for equipment procurement. We couldn’t wait on the IPO to make those purchases,” Williams said, adding that had Regency not taken on those costs, the company would have grown its earnings.
After paying those costs and paying off the short-term loans, Regency petroleum was left with $110 million, said Williams. By year end December, its cash position dipped further to just under $95 million. That, however, was exponentially greater than the $1.3 million the company held in cash in 2021.
The cash resources on hand will be used to complete the stations, purchase LPG cylinders for the consumer side of the business, and procure a new rig, tractor head, and trailer to transport automotive fuels during emergencies.
“We have haulage contractors to transport our products, however, in the event that there is a difficulty, we will be able to use our own haulage to take care of our needs,” Williams said.