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ENOC/EPPCO – Thrown Out of Sharjah?

ENOC/EPPCO – Thrown Out of Sharjah?

The ongoing policy of silence in the face of public concern and the questions of media haven't helped ENCO/EPCO at all, says Alex McNabb

June 23, 2011 4:31 by

As Mark Twain once said, “Never pick a fight with someone who orders ink by the barrel.”

According to the reports (The National does by far the best job of reporting the story), the Sharjah Executive Council through the Sharjah Economic Department set a 72 hour deadline Tuesday (it meets each Tuesday) for the Emirates National Oil Company and the Emirates Petroleum Products Company, better known to us all as ENOC/EPPCO, or the ENOC Group to get its stations in Sharjah working again, which would give it until Friday to comply. The ENOC Group operates 82 outlets across Sharjah and the Northern Emirates. Well, operated. They’ve been failing to actually sell any petrol for the past month. The National reports that the penalty for non-compliance will be the closure of all service stations and facilities operated by the company in Sharjah. That’s pretty hard-core. And if you haven’t heard ENCO/EPCO stations actually were shut down this weekend.

The whole situation has been rendered that much more ridiculous by the company’s early attempt at shrugging off the problem with a little slice of the mendacity that so many organisations here so readily employ when asked anything even remotely challenging by media. It appears we’re learning the lessons all too slowly – it’s not just print media that matter now: when you say your forecourts are closed because they’re being upgraded, you can bet your bottom dollar that there are thousands of eye witnesses out there more than willing to share the ‘Oh no they’re not’ online – with each other and, of course, with any watching media.

After that little slice of silliness, the company has refused any comment at all, every report in the media graced with the failure of the ENOC Group spokespeople to return calls or comment. The ongoing policy of silence in the face of public concern and the questions of media haven’t helped the company at all. The explanation delivered to the Sharjah Executive Council (one was, apparently) is being treated by confidential by the SEC, but the papers have enough energy experts quoting away for us to be able to substantiate what commenters to my much, much earlier posts on this have said: the issue is one of being willing and able to continue to supply petrol at a loss because the company buys fuel on international markets and then has to sell at locally regulated prices, which are substantially lower.

Given this is the case, you’d be forgiven for wondering why they didn’t just go ahead and say it. If the intention is to promote a change in the regulations or to gain some assistance in subsidizing the price of fuel, what could the possible harm be of letting the debate take place in public? If the company had been open and transparent about the situation in the first place, enunciated the issue and its position, it would likely have people understanding the issue and the company’s response. There’s even an argument that it would have prompted a faster and more positive resolution to the whole situation by bringing it out into the open.

Now they’re facing being shut down and I can’t see many tears being shed – particularly if they’ll be replaced by nice, shiny ADNOC stations.
This post original appeared in Alex McNabb’s Fake Plastic Souks.

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  1. Angry motorist on June 26, 2011 6:03 am

    Many poor retail staff are facing uncertainty and potential job loss and still no updates from the company regarding the recent closure of their petrol kiosks claiming to be under invisible msintainance. Could it be that Most of the top executives and decision makers were enjoying their lovely summer holidays or sudden  unplanned business trips, leaving the northern emirates woes to the residences and retail staff! After all, whatever happen in the retail or northern emirates residences will not affect those sitting comfortably in the headoffice or overseas rep office, so why do they care? 

    Question 1 :
    If this company is always so enthusiastic in sponsorship local sports and even  to overseas rich private college to build a classroom under their name and even sponsoring students overseas leisure tours that cost millions, petrol loss shouldn’t be their main concern right since they have excess funds for sponsorship. This mean this company is not running in financial crisis, but why sponsor overseas private university and not in UAE charity organisations for the needy? And why to that particular school again and again ???? 

    Question 2:
    Thought the company spent millions in upgrading their refinery and building reformer many years back, what happen to it? No updates too.

    Question 3:
    This is one of the unique state owned company that do not run public tender for buying their products as compare to other government opc, why?

    Question 4
    This coy had many public well known investment losses, eg failing to buy  over dragon shares, starting the same losing money offshore business in a short time frame gap by the same group of people, why?

    If the rationale is to increase oil price as per international price, Oil increase may not stinge abit to these oil companies, perhaps their staff are all being subsidized internally with free petrol card, so why do they care about price increase? 

    It’s time Dubai govt should really explore how these govt owned companies running the business with government fund as if it’s their family business. Investigate thoroughly both internal and external. Check the source from procurement, trading, supply, processing to delivery of the final product to stations, other than the claimed petrol costs loss, what went wrong! Is it due to mismanagement or lack of professionalism internally, entrusting wrong people for the wrong job! Don’t keep blaiming on rising crude price or asking for government subsidy. The government has been kind to create jobs for all of you, you should payback the government and public with profit. If you are losing, what went wrong? 

    Too many questions for ‘the’ company, who can answer all these questions? 

  2. singbasi on June 26, 2011 11:02 am

    Even though it will be hard for the retail staff to loose their jobs, it is a fact that has to be lived with if you want to cut costs. We just hope that the UAE nationals do not loose their jobs as this is a governmental company and should benefit the locals not harm them.

    In regards to your questions, please find my point of view below:

    Question 1: ENOC employs a commercial business approach; sponsorships and advertisements are required to sustain its image. ENOC has many profitable subsidiaries which run very well, so if the retail business is running at a loss, it does not mean that the company should stop its marketing and PR activities. Your question makes it look that these sponsorships are just a waste of money.

    Question 2: The refinery and reformer is working as far as I know, but what has it to do with this situation? If your hint is that they should produce gasoline from the refinery that’s true, but remember that they have to buy the crude oil for that from international markets at high prices which creats a loss as per the price differential.

    Question 3: It is true that other governmental companies employ the tender process. However, ENOC employs a more commercial approach which makes it more as an energy company rather than a governmental bureaucratic company. We do not see major oil companies like shell or BP or trading companies floating tenders which suggests that the tendering process is not necessary the feasible one.

    Question 4: I do not know much about this claim, all I know is that all of ENOC’s subsidiaries are doing well except for the retail business and all of that profitability does not cover the huge losses.

    I am an expert in procurement and let me tell you that no company no matter how efficient their operations are will be able to avoid losses if the cost of the fuel they are selling is more than the selling price. In fact ENOC is praised to be the only of the 3 gasoline retail companies in UAE that employed risk management strategies to reduce the losses for the 2 years following the economic crisis.

  3. Andrew on June 27, 2011 6:50 am

    Abu Dhabi is coming:

    All your base are belong to us.

  4. zayna on June 27, 2011 9:46 am

    Who cares with both of you, leave to the authority to check and company to prove.

    Just give us theeee petrol with noooooo price increae.

    Yes, Abu dhabi please come fast and help if dubai is not.


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