Liquigas, the gas company, is still considering cheaper LPG supplies from Russia but is focusing on logistics and security of supply to avoid shortages.

Chief executive officer Roberto Capelluto told The Times Business last month the company was confident it would able to take delivery of a first shipment of LPG from Russia and Kazakhstan by the end of December to ensure cylinder gas returned to reasonable price levels quickly. The statement coincided with the announcement of higher gas prices last month.

“Liquigas is constantly on the look-out for reliable sources at the best price possible for the customer while guaranteeing quality and security of supply,” Mr Capelluto replied this week when asked about alternative supplies.

“Supplies from Russia are still being considered but Liquigas puts a great focus on logistics and security of supply to avoid any risk of shortage for the country.”

The issue of alternative supply lines has been obscured by the three-week debacle over pricing and distribution. On Tuesday, the Consumer and Competition Department ruled Liquigas was justified in refusing to give full €25 refunds to consumers who wished to return their gas cylinders without producing a receipt for the deposit. Liquigas insists deposits for 4,600 cylinders – just six per cent of its inventory – were registered at €25.

Easygas, the new player in the cylinder market, complained Liquigas’ stance made it difficult for consumers to switch supplier.

The department however found that Liquigas’ policy was not introduced or used to stifle competition in door-to-door distribution of gas cylinders.

Mr Capelluto cautioned this week it was also important to distinguish between possession and ownership, particularly as many consumers seemed to believe they owned gas cylinders on which deposits had been paid.

“The cylinder deposit does not transfer ownership of cylinder to customers,” the chief executive pointed out. “The final responsibility on the cylinder and all costs related to its maintenance and testing are borne by Liquigas. The deposit is for the use and proper care and handling of the cylinder, which remains Liquigas’s property. Today’s cost of a cylinder to Liquigas is €25, which is the current deposit. The majority of cylinder deposits, ranging from nil to €1.16, €11.65, €18.63, €25, have occurred over several past years.”

Distributors, he stressed, had always been instructed by Liquigas to issue receipts for deposits paid for new cylinders, in line with its predecessor Enemalta’s policy. Consumers had to ensure they obtained receipts from distributors.

Despite suggestion of a consumer backlash following the receipts issue, Liquigas maintained its position, which Mr Capelluto said was made clear in advertising the company placed in newspapers last weekend. Yellow, brown or Liquigas green cylinders which consumers wished to return were to be handed to the company through its distributors. If consumers were unable to produce a receipt for the deposit, a €5 refund would be given.

Asked whether this entire saga could have been avoided, Mr Capelluto said Liquigas had been co-operating with the regulator before it had sealed the LPG business take over from Enemalta in November 2008.

The bulk sector is problem-free with both Liquigas and Easygas operating in a competitive environment. Mr Capelluto maintained Liquigas had no difficulty with Easygas having their own distribution system through its fixed points of sale within the cylinder market, but insisted that its property rights and its deposit policy were respected.

Liquigas’ own fixed points of sale had proven a success as many consumers preferred to buy gas at their own convenience. The company intended to keep the current fixed points while considering new areas to reach more consumers. Meanwhile, Liquigas continued to insist on competition “right up to the customer’s door”.

“Liquigas’ main thrust is to have its own branded delivery service, however, and by whoever, this is provided,” Mr Capelluto stressed.

The company recently admitted its operation may not be profitable as yet. What was its major priority at this time: pricing or retaining market share?

“Pricing and market share in relation to profitability are each a factor of each other,” Mr Capelluto replied.

“Liquigas will evolve those policies that it perceives as best to achieve profitability while implementing a strategy to further develop the market through efficiency and service to the customer.”

He stressed Liquigas had participated in an international tendering process to enter in the LPG business in Malta and the shareholders had invested in the acquisition of the business and its goodwill.

Shareholders were now investing in a new plant and the retesting process for a total €25 million.

“Liquigas’ objective is to stay in the Maltese market offering a good service and expecting also a fair return,” he said.

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