Johannesburg - Chevron South Africa executive chairman Shashi Rabbipal yesterday defended the company’s move to renegotiate contracts with Caltex retailers, saying this was done in order to advance the company’s transformation objectives.
Rabbipal stopped short of accusing the retailers of lying, charging that negotiations with individual retailers were typically entered into at least six months prior to the end of the agreements.
He said negotiations and decisions to renew contracts were dependent on many factors, including specific performance standards and alignment to its transformation goals.
“Chevron South Africa entered into new franchise agreements with its retailers from around 2001. These agreements were valid for a period of 15 years,” Rabbipal said. “All retailers were aware that their existing contracts would end and that new contracts would have to be entered into from 2016.”
Chevron is facing a backlash from Caltex retailers who have accused the company of unilaterally terminating their franchise contracts, putting thousands of jobs on the line.
Rabbipal said a total of 70 retailers had their contracts coming to an end and about eight might not get their contracts renewed “because of their (performance) standards and current status”. He said the number of unhappy retailers had been exaggerated.
“In the very limited number of cases where Chevron South Africa is aware of retailers’ unhappiness, it is because the decision has been made not to negotiate new contracts with them because they do not meet the aforementioned criteria,” Rabbipal said.
Asked whether the company would choose black retailers over their white counterparts when it entered into new contracts, Rabbipal said white retailers who performed well would be required to submit transformation plans to Chevron. He said the plans should reflect the different elements of broad-based black economic empowerment “and not just ownership”.
“The plans would be reviewed after five years,” he added.
The petroleum and liquid fuels industry has in the past come under fire from government for lack of transformation, despite the existence of the liquid fuels transformation charter, which provides a transformation framework for the liquid fuels industry.
As Caltex broke its silence on the matter, more retailers yesterday voiced their displeasure with the manner in which the company had handled the renegotiation of the contracts.
One of the disgruntled retailers, who declined to be named, vowed to fight the matter. “I received an independent legal opinion. A contract cannot be cancelled just like that,” he said.
Chevron sells its products under the Caltex brand with approximately 845 service stations nationwide. The company also owns the 110 000 barrels a day refinery in Cape Town.
Price Njokweni, the South Africa general manager for sales and marketing, said the move to renegotiate the contracts had nothing to do with parent company Chevron’s decision to sell its South African business.
BUSINESS REPORT