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News Article

Stakeholders Disagree on Reasons Over Gas Station Closures

By Peter Appleby | Wed, 10/14/2020 - 17:35

New gas station regulation was intended to guarantee that Mexican consumers received the gas they paid for. But noncompliance over dispenser updates has led to site closures and stakeholders are at odds over why this has happened.

ONEXPO, the gas station association, has recently written to President Andrés Manuel López Obrador to ask him to step in and stop closures until sites are able to comply with the NOM-005 SCFI 2017 regulation. ONEXPO says that the majority of gas station owners applied for equipment upgrades within time but that there is a supply shortage.

“The main reason is that the manufacturers and suppliers of these dispensaries do not have sufficient inventory (stock) of such equipment and escalation kits in Mexico. Although the vast majority of gas station owners have made their purchase requests on time and in due form, to date suppliers have not been able to meet all orders and have reported that factories are not able to meet the demand for dispensaries required in Mexico at approximately 59,000 units” the association told El Economista.

However, companies like Petroassist, which carry out the equipment upgrade, offer a different side of the story. In an interview with Mexico Business News just days before the regulation came into force on Oct. 8, Petroassist’s Country Manager Raúl Silva said that retail station owners had delayed the upgrade in the hopes that the deadline would be pushed back in light of the COVID-19 pandemic.

The deadline for the regulation was in early October but it seems that many companies were counting on another extension that is not going to happen,” said Silva. He predicted that retail sites would have their activities suspended until they complied with regulations. “When the regulation is applied, inspections will be carried out and companies that do not comply with the regulation will be forced to close until they have met the requirements,” he said.

Now, gas station owners face a long wait while companies including Petroassist work to update dispensary equipment around the country. ONEXPO’s estimate that 8,000 gas stations do not yet meet regulation requirements suggests the wait will be a long one and, with gas stations only just emerging from the sales volume drop-off they experienced as a result of the pandemic’s restrictions on movement, idling their pumps will be the last thing station owners want, Silva says. Unless the president steps in, idling may be unavoidable.

All we can do is receive the orders and then carry out work as quickly and responsibly as possible,” said Silva. “If companies choose not to invest and have their retail sites closed temporarily, there will be a huge backlog for us. This is not the ideal situation because it means many retail sites will see prolonged periods of closure. We cannot hire 15 to 20 extra service technicians thinking this demand may happen and then not have work for them afterward.”

Raúl Silva's full interview can be read here.

Peter Appleby Peter Appleby Journalist and Industry Analyst