Gas price hikes

20/03/2012 16:43

THE Consumer Council is again reiterating its call for gas prices in Fiji to be monitored and regulated.

This comes as consumers brace for the effect of a 10% hike in the price of Fiji Gas’s 12kg cylinder. The price of the standard Fiji Gas 12kg cylinder increased from 19/03/12 from $49 to $54 meaning consumers have to fork out $5 more for cooking gas. Fiji Gas’ 4.5kg Handi cylinder has increased by $2.20 (16%). So far Blue Gas has not increased the price of cooking gas.

In 2011, Gas Companies decreased the quantity of gas from 13 kg to 12 kg where consumers paid more for less gas. In April 2011, Blue gas sold 13kg cylinder for $49.00 whereas Fiji Gas sold 12 kg cylinder for $49.00. In July 2011, Blue Gas also reduced the size of cylinder to 12kg and the price remained $49.00. This itself shows lack of competition in the gas sector where two companies co-exist with their market shares.

The Council is baffled by the behavior of Fiji’s gas suppliers where retail gas prices continue to move in one direction (upward) despite downward movements in the international prices in 2011. From October - December 2011 the Saudi CP (contract price) for butane dropped but retail prices in Fiji remained the same. The Saudi CP is the international pricing benchmark followed by Australia – Fiji’s main source market for LPG. It is obvious that the gas suppliers do not pass decreases to consumers. They are very quick to apply increases when the international price moves up as seen this February, which is the highest increase seen in gas price at international level.

It is obvious that an unfair system exists where the gas companies are allowed a free rein on pricing. Price monitoring and regulation will bring about more transparency in costing and fair retail prices for consumers.

The Council calls on policymakers to consider practices in neighbouring countries like Tonga where LPG prices are regulated by the Ministry of Labour, Commerce and Industries. In 2011 that Ministry embarked on a review of its LPG pricing template aimed at increasing the level of scrutiny of costs that feed into prices and the long term trend of LPG pricing.

The Council urges the Fiji Commerce Commission to seriously investigate the pricing practices of the two gas companies in particular parameters such as freight rate and operating cost to make cooking gas more affordable.  The duopoly in the gas sector deserves close scrutiny so that the lack of response to international price drops is curbed.