Harvest Energy dealers, tens of thousands of pounds out of pocket from the demise of the Prax oil refinery, are reaching breaking point as the fuel distributor fails to meet its own deadline for putting alternative supplies in place for them.
Tom Dant, who manages three Total Energies-branded forecourts in Licolnshire, says he is now looking into suing Harvest Energy for failing to supply him with fuel, which has cost the business around £120,000 since his deliveries from the Lindsey Oil Refinery dried up four weeks ago. Tanker drivers have been laid off and administrators called in.
For eight days in July his three sites had at least one fuel grade out of stock, and like other operators he has been forced to buy alternative supplies of fuel at a higher rate than can be achieved on long-term contract – costing him between £15,000 to £18,000 a week.
“They can’t keep dragging this out,” says Dant, managing director of Gill Marsh Forecourts. “They clearly don’t have a solution and keep fobbing off the dealers. It’s hard to see a way out of this for them with no fuel, no drivers, nor any remaining goodwill from dealers,” he adds.
Fellow dealer Tony Cookson, owner of Lawford Service Station, who signed his site in Manningtree, in Essex to Total Energies branding in March, says he is giving it until the end of this month before he walks away from his contract and actively seeks an alternative long-term supplier.
“If it wasn’t for my daughter, who works in the business and has young children, and that I have committed to a £300,000 refurbishment that I can’t get out of, I would walk away and say ‘stuff them all’,” he says.
Meanwhile, Top 50 Indie Karan Retail, which signed its Crowborough, East Sussex forecourt as a Total Energies site several months ago, is looking into taking legal action too. “It’s a major disappointment,” says operations manager Visnu Kumaranisanthan. “And I find it difficult to comprehend how they could not have seen this coming down the line when they entered a contract with us.”
More than a week ago, on July 17, Harvest Energy’s head of dealer sales Tom Morgan sent a letter to the operators of the 125 dealer sites affected, to say that the business aimed to update dealers with a resolution to their fuel supplies within the next five to seven days.
However, today (Monday, July 28) retailers received another email from Harvest Energy’s Morgan saying that the company needed more time to secure “an alternative solution for supply and delivery”.
In the message Morgan added: “Progress is slow, but please rest assured that this remains a priority. We, as a team recognise the impact this is having on your business and are pushing for a resolution as quickly as we can.
“In the meantime, we sincerely appreciate that your patience has run out and apologise sincerely for the lack of a concrete solution at this time. We kindly ask that you continue to source your fuel from alternative providers during this period.”
To say that dealers’ patience has run out is an understatement. One retailer we spoke to, Seevaratnam Muresh, has been losing £50,000 to £60,000 a week by having to source stop gap fuel for his 10 Harvest Energy sites. It has also been time consuming, with most days Muresh spending the morning sorting out deliveries.
“They’ve been given long enough to get something in place. I don’t want to be dragged down with them,” says Muresh, who has appointed a lawyer in a bid to free him from his contract.
Muresh was meeting with the Essex-based fuel supplier New Era Energy to secure more favourable buying prices on Monday. In recent weeks he has been paying 3p to 7p a litre more than he would have with the Harvest Energy contract. “We are looking at pricing on a weekly lag from New Era, and I managed to get a £1m credit line. It is the best of a bad situation,” says Muresh.
What has been particularly frustrating is that dealers are still receiving Monday morning updates on fuel prices from Harvest Energy. “It is adding insult to injury,” says Tom Dant, whose lawyer has sent a follow-up letter to an initial request for Dant to be freed from his contract.
“We’ve given them seven days’ notice, which I’m sure will fall on deaf ears,” he adds. ”The situation has got completely out of control. If we have to we will sue. Even if it costs me £20,000 in legal costs that represents just a week and a bit of what the current situation is costing me.
“A lot of dealers will be seriously affected by what is happening. For us, it means we are having to scale back development plans. We were planning to look at redeveloping our Partney site in the next couple of months, but this might not happen now,” says Dant.
Harvest Energy, which signed a deal with Total, the multinational oil company, in 2019 to develop its network of service stations and to secure its fuel supply, went into administration on June 30. It is owned by the Prax Group, owner of the North Killingholme, Lincolnshire oil refinery which is being shut down after administrators were unable to find a buyer.
The administrators, dealing with the press for Harvest Energy, declined to comment.
Tony Cookson’s daughter Harriet is setting up a support group for affected dealers on WhatsApp. Contact her at accounts@lawfordservicestation.co.uk
The PRA reminds Harvest dealers that they have automatic membership of the association where they can seek legal advice.
