Sales from Koperasi Perniagaan dan Perusahaan Melayu Berhad’s (Ko-PPMB) Menglait fuel station are expected to keep the cooperative profitable in 2018 but uncertainty looms over their long-term future with the cost to renew their land lease in 2023 in question.
The cooperative, one of the longest-running fuel retailers in the Sultanate, posted profits of $87,238 and $210,500 in 2015 and 2016 respectively – with 2017’s results to be deliberated at their AGM this upcoming May.
Ko-PPMB’s Board of Directors Pg Dato Paduka Hj Mustapha Pg Metasan, Dato Paduka Hj Mohd Suni Hj Idris, Dato Paduka Hj Ahmad Kadi and Hj Julaini Hj Abd Latif recently expressed their confidence in dolling out a dividend to shareholders this year but said the cooperative’s long-term fate hangs on the renewal – and the accompanying fees – of the 0.75 acre land their Menglait station is built on.
“Right now we are just five years away from the expiry,” said Ko-PPMB secretary Hj Julaini. “Because of the location, we have been told the fee will be very substantial, although we are still waiting for the official figure quoted (by the authorities).”
Hj Julaini said it’s imperative for the cooperative to ready the funds for the renewal – and there’s uncertainty amongst shareholders that the fees accompanying the renewal will be in excess of $1 million, which would potentially jeopardize dividends and profitability years after renewal in 2023.
“If the amount to renew were (well above $1 million) it would take more than five years to just to pay off (if profits were $200,000 annually),” said Hj Julaini. “This would make us unprofitable for some time. So it’s very important to know the official amount so we can inform shareholders, plan and decide what course of action to take.”
In recent years, strong profits from Ko-PPMB’s Menglait station have shored up losses and unproductive ventures elsewhere.
Rentals from a $640,000 commercial building in Kg Telanai purchased in 1993 have yet to cover costs, while five acres purchased for farming in Kasat has yet to be utilized due to several issues – including gaining approval; which they are now working with the authorities to resolve.
Ko-PPMB has also yet to fully complete its transition from being a limited company – Syarikat Perniagaan dan Perusahaan Melayu Berhad (SPPMB); a process its shareholders voted to initiate in 2013, which offered a more democratic model of management – where maximum individual ownership is 20 percent – as well as offer savings on corporate tax which are rolled back into the cooperative.
Despite these challenges – Ko-PPMB continues to arguably be one of the Sultanate’s most consistently profitable cooperatives; it has no long-term debts, and the original 160 shares issued to 103 members in 1965 valued at $500 are now worth over $14,000.
Ko-PPMB began operating its first fuel station near the former Riverview Hotel from 1965 to 1984, at the intersection where Jalan Kumbang Pasang meets Jalan Gadong. The government later reclaimed the land, compensating SPPMB with their current spot in Menglait.
They reopened at their new location in April 1987, before demolishing and building their third and latest station in 2000 for just over $1 million dollars.