Minister asks MRA to formulate new LPG price mechanism

Energy minister Konrad Mizzi has called for a revision in the way gas is being purchased, in a bid at achieving price stability.

The company Liquigas today announced a rise in prices for 12kg and 15kg LPG cylinders, rising from €16.60 to €17.30, and from €20.75 to €21.65 respectively.

"LPG is being purchased from one month to the other, because the operator has no incentives to buy gas in bulk during cheaper periods," Mizzi said.

Mizzi has asked the Malta Resources Authority to review the price mechanism of LPG in order to provide more stable prices to households and businesses.

"Consumers are not getting the best deal. Were it so, the gas storage tanks wouldn't be half empty right now," Mizzi told reporters gathered at his office in Castille

The minister said the current regulatory framework did not incentivize the dominant operator to carry out bulk-buying as the price mechanism did not cater for risks which the operator may run.

Put simply, Liquigas was currently carrying out monthly purchases. The prices passed on to the consumers reflect the current international LPG prices. A better framework would allow the main operator to buy, for example, three months of LPG in advance providing consumers and businesses price stability.

"LPG prices practically change every month and we want to offer stability," Mizzi said, adding the regulatory framework formulated in 2008 did not provide for price stability.

"If the operator had had the incentive to buy more gas last month, this month we wouldn't have had another increase. This is not the operator's fault but the lack of incentives in the framework," the minister insisted.

Mizzi said the government wants to everything possible to ensure price stability, and if the operator enjoyed the incentives then it old be a win-win situation. Past trends, he said, showed a clear pattern of price variances and the operator must be incentivized to buy more when the prices are lower.

The dominant player, Liquigas, has agreed to start the discussions with MRA which would lead to a new framework which would come into force by December 2013.

Mizzi insisted the government was committed to fighting the "status quo".

Mizzi commented that the latest price increase appeared higher than previous years, but not as high as prices on the international market.

The new prices are effective as from Thursday 1st August 2013, being the beginning of the month. The last revision in June set the 12kg price at €16.60, and the 15kg price at €20.75. Full Liquigas prices can be found on Liquigas' website: www.liquigasmalta.com. Distributors of Liquigas cylinders are not authorised to charge additional prices over and above the above prices.