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Business is hard with cutthroat competition in gas market – Beppe Hili
Entrepreneur who was interested in liberalisation of gas cylinder market says restricted demand leaves little space for competitors.
Competition in the small market for gas cylinders makes it one of the tightest of market spaces for cutting prices.
In spite of a drop in the international price of liquid petroleum gas (LPG), the dominant gas supplier in Malta may not be in a position to lower its prices due to the stringent pressure of competition, a leading entrepreneur has told MaltaToday.
Beppe Hili, whose Hili Group had looked into tendering for the liberalisation of Enemalta's LPG distribution arm years back, said the gas cylinder market was so small that competition can be easily damaging.
"Local demand for gas is only 18,000 tonnes per year," Hili said, who also claims the liberalisation tender had "never made sense in the prevailing conditions... with such a business plan if a competitor takes just 10% of the market, you are basically out of business."
Liquigas however says its investment in a gas storage plant at Benghisa will allow it to store larger consignments of cylinders, and even keep prices stabler.
Liquigas, which is the dominant gas provider in Malta, today has 75% of the market. Its competitor Easygas has the rest of the market.
The international price for liquid petroleum gas (LPG) fell in April while Maltese consumers had to bear the brunt of a price hike on gas cylinders, according to Platts prices provided to this newspaper.
While importers Liquigas cited the increasing international price of butane as the driver behind the increase in the price of gas at the start of April, prices quoted in Platts LPGaswire indicate that the price of their LPG mix actually decreased by 2.2%.
The same data shows that propane fell from $1,070 per metric ton to $935 between March and April, quoting the seagoing free-on-board price, while butane increased from $990 to $1,020.
Industry sources who spoke to the newspaper believe Liquigas's bulk-buying means that once a consignment of LPG is purchased, their domestic prices cannot be changed when the international price falls.
But all price increases for gas cylinders have to be approved by the Malta Resources Authority.
This evening's edition of Bondiplus is expected to discuss the gas cylinder prices, with representations from the two major political parties.
Joseph MELI •
Irrespective of what this genius says -and his arguments are immensely flawed-how come the less dominant gas supplier in Malta has persistently charged less for their LPG gas and why has the purported regulator-the redoubtable MRA-remained supine and mute?Finally, gas prices in the USA have been reduced by 50%-yes count it-50%.LIQUIGAS maintain that they cannot change their prices when gas is decreased in price after purchasing it but fail to mention thta they do change their prices which DO NOT reflect the price at which they bought it and cite inaccurate and irresponsible reasons(gas price increase)which are clearly not true for doing so.It is called profiteeering or perhaps racketeering!
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So what we have now in Malta, when the price of gas on the international market goes down, prices cannot be reduced due to "the tightness" of the market. But when gas prices on the international market, rise, the price locally is increased !!! This is the liberalisation which GonziPN has lumped on a suffering public !!!!
