Robert Capelluto | Committed to 'doing things properly'

Liquigas has been operating for almost three years now. At what point is the company today?

It's very important to clarify the different operations of Gasco Energy Ltd and Liquigas Malta Limited.

While Gasco Energy is involved in the storage and bottling of LPG for which a new installation has been inaugurated on Monday 12 November 2012 at Benghisa, Liquigas is focused on LPG distribution and the development of new uses of LPG in Malta.

In its first three years of operation, apart from embarking on the regular supply and distribution of LPG cylinders and in bulk, Liquigas has successfully undertaken a number of new and innovative initiatives.

These achievements include: the ongoing retesting and certification process of Liquigas cylinders according to EU regulations; the distribution of an information leaflet about LPG safety issues to all Maltese households (160,000 families); the LPG distribution through meters, with a centralised storage (Midi/Tigne' Point, Malta International Airport, Madliena Village, etc); the introduction of a new small 5 kilogram cylinder for leisure and domestic uses called Twinny; the introduction of AutoLiquigas, that is LPG for cars, with the opening of the first LPG service at Luqa airport petrol station, which soon will be followed by another installation before the end of this year; and the development of feasibility studies for the use of LPG for air conditioning.

These initiatives, together with others that Liquigas will be taking in the coming months and years, are all aimed at achieving the company's overall objective: these will lead to a better understanding of this clean and efficient energy, not only in its traditional applications, such as cooking, heating, and hot water, but also for new areas such as autogas, air-conditioning and co generation (the production of electricity using LPG as a fuel). These will bring many benefits both for the domestic consumer and for enterprises.

Has the company reached its targets since taking over the operation from Enemalta?

The targets are undoubtedly challenging and, from a commercial point of view, Liquigas is involved in an on going process to constantly improve the present services and introduce others.

The take-over of the business has achieved a number of targets such as the importation of gas directly from the international market. Other challenges, however, require more time to be implemented and/or to find the right solutions for them. These include, for example, the further improvement of the cylinder distribution model.

What changes have the company undergone throughout this time? How large is the company employ today?

Liquigas currently employs 14 persons. We are looking at strengthening our sales department with an enhanced customer care service and better technical support to customers, among others.

Gasco Energy Limited inaugurated a new plant this week. What significance does this new plant have for the company?

Our new facility truly marks a turning point in the provision of energy in Malta. Situated at Bengħisa, Gasco Energy's state of the art sea importation terminal, storage and bottling LPG facility is a €23 million investment by a joint venture between Liquigas Italia S.p.A and Multigas Limited.

Built in just two years, this facility is today one of the key energy assets for Malta. It has more than doubled the storage capacity - it now stands at 4,800 metric tonnes, up from the previous 2,300mt. The facility is also equipped with the latest technology and security measures.

Liquigas Malta is committed to 'do things properly'- in terms of planning, standards and quality investment.  While bringing our project to fruition on budget and ahead of schedule, we have re-used an abandoned quarry - previously an eyesore - to house this modern plant which respects all the stringent Seveso II safety directives mandated by the EU. 

With this facility, Malta is now at the forefront in Europe as far as the LPG sector is concerned. Now that the operations of the old Qajjenza Plant have been all transferred to our new facility in Bengħisa, eliminating risks the Qajjenza plant had due to its age and present location. Gasco Energy will embark on the dismantling of the Qajjenza plant, which is final part of the project. 

Liquigas launched the Autogas product earlier this year. What options does it present to consumers?

Autogas is well known in many European countries (Italy, France, Poland, etc) and represents an excellent alternative to petrol from an environmental and economic point of view. This has been also recognised at EU level that included the increased use of LPG for a better environment.

Another important benefit for Maltese consumers is that the price of AutoLiquigas is and will remain for foreseeable future at around 50% of the cost of unleaded petrol.

The costs to convert a vehicle to Autogas stands reportedly at around €1,000. Why should consumers make the switch?

It is not really a switch over but the consumer will add an alternative and even cleaner fuel to his/her car. Consumer driving such cars will always have the option to run their vehicle with either petrol or LPG by a simple touch of a button.

We estimate that the €1,000 investment will be recovered within 30 months driving just 15,000 kilometres a year.

Earlier this year, you had announced that Liquigas has not started making a profit. Why is this?

Gas prices are regulated by the Malta Resources Authority (MRA) based on cost recovery methods. The losses incurred in the first 3 years of business are mainly due to a more competitive market and to the risks linked both to the volatility of the raw material costs and the strengthening of the dollar.

When is the company expecting to start turning a profit?

Liquigas is proposing various models to MRA as the regulator. These models should allow the private investor an acceptable return on capital invested.

Gas prices have been steadily increasing over the past few years. Can consumers expect a decrease in prices at some point in the future?

Decreases could only result from a decrease in the international price, together with more favourable dollar/euro exchange rates.

The 12kg cylinder price has trebled (263% increase) in the last four years. What is the reason for this unprecedented price hike?

It is important that a clear picture is given to the consumers. Comparing the prices of today within a liberalised and privatised market with the price when it was a fully subsidised price by Government is not a fair comparison.

Even when the cylinders' subsidised price was at €5.40 euro, the real cost of gas and industrial costs were not being covered at all, creating a deficit that the Government had to cover every year for Enemalta.

To give a better picture, the comparison has to be like with like. It means that prices have to be compared with those under a liberalised system that is as from August 2010.

While the price of a 12-kilogram cylinder has increased 46% when compared to August 2010, the cost of LPG on the international market has increased by 57%.

Within these last 27 months, the international cost variation of LPG was mostly and significantly on the increase.

There have been repeated reports that the increases in local LPG prices do not reflect the fluctuations of the international LPG prices. What is Liquigas' position? How does it justify this to consumers?

The reply is clearly explained in the previous answer. The variations are always a combination of the cost of gas in dollar on the international markets and the governing exchange rates.  

There may be cheaper prices for inferior LPG consignments on the international market, but Liquigas is always looking for quality and - also a very essential issue considering that Malta is an island and quite some distance away from these raw materials sources - the reliability of the logistical/transport issues.