IN BRIEF:
- 30/9/2019: Statement from BDL covering only 85% conversion in USD for the importation of Oil, Wheat and Pharmaceuticals. The remaining 15% to be provided in USD by the respective sectors
- 29/11/2019: Strike Day. The $ is scarce, and service stations are losing 800 LBP/20 Liters from their profit margins. They cannot bear the losses anymore and go on strike
- 4/12/2019: The Government today reduced all the margins of every activity (import/distribution and service stations) to bear more losses temporarily instead of yielding 100% conversion in USD which is the long term solution
IN LENGTH:
After the strike that has hit the petroleum sector in Lebanon in the past few days, some points need to be clarified.
After the dollar currency crisis that all businesses are facing, gas station owners are experiencing huge losses when converting 15% for their fuel purchases to dollars, a loss that reaches 800 LBP per can of gasoline TODAY (What about tomorrow?) and distributor knowing that the gross profit of stations per 20Lts of gasoline is 1,900 LBP only (while the taxes are 7,477 LBP/20Lts).
Moreover, Lebanon Central Bank has issued a taamim for the fuel importation that 85% only of the cost of products shall be converted in USD and 15% shall be provided by the market in dollars for importers to open an L/C. Therefore, the strike is a result of a currency exchange crisis. The shortage in dollars and an unstable rate of exchange that is increasing day by day reaching 2,350 LBP for 1$ V/S the rate adopted by Banks and the central Bank is still $1 to 1,507.5 LBP is generating increasing losses.
Why are the petroleum companies accused of being a "cartel"? What is behind this negative propaganda and false accusation?
The petroleum business is being called a "Cartel" knowing that a cartel is "an association of manufacturers or suppliers with the purpose of maintaining prices at a high level and restricting competition".
Obviously, WE ARE NOT AN OIL CARTEL… this is not what petroleum companies are about since the government itself sets the fuel, diesel and LPG prices every Wednesday according to the Ministerial decree, moreover the government itself competes with petroleum companies with an important market share in diesel and soon 10% market share in gasoline.
The main problem remains that many stations are shutting down due to the currency instability and are unable to sustain their operations. Today the government intends to import 10% of the gasoline as a mean to find a solution to the crisis? knowing that the whole crisis is a matter of currency and not an importation issue! What matters to the consumer is that whether government imports or Petroleum companies do, the price will be the same at the pump!
Today, the private sector is in jeopardy.
MEDCO’s point of view:
In 1910, Georges N. Chammas, our Founder, incepted our purpose: to move people from one station to another in their lives.
We relentlessly pursued our mission in honesty, dignity, excellence and innovation.
We are the oldest 100% Lebanese Petroleum importer and Distributor Company, a family business with a legacy and intense patriotism. A pillar of the private sector that employs 700 MEDCOers with great families striving like all Lebanese for a decent living and wanting to sustain rendering its quality services to Lebanese citizens in our beloved country.
We are, like all of you, victims of incompetence and corruption.
May we all fuel the country with positive, economical and humanitarian actions for CHANGE for a brighter future.