Liquigas CEO Roberto Capelluto has expressed his deep concern that consumers are not reaping the benefits of the company’s €25 million investment – because 23 gas distributors are refusing to accept that their territorial agreement dating back to 1992 is now null and void.

In the days of Enemalta, gas cylinders were distributed by 30 people who were self-employed, each with an exclusive geographical territory. One of those is no longer active, and six others have agreed to only distribute Liquigas cylinders. The other 23, however, are still distributing both Liquigas and Easygas cylinders, and they are insisting on retaining their exclusive territory.

Liquigas has by far the largest market share – it estimates that it sells 14,500 tons of the 17,000 tons of cylinder gas every year. So its concern is not muscling out its competitor: what it does want is control over the level of service given, which it believes is only possible if it has its own distributors for Liquigas products who are tied by a service level agreement on customer care, safety and so on – but without territorial exclusivity.

“We are not trying to crowd Easygas out of the market. We are quite prepared for Easygas to distribute its product wherever it wants and we accept that some distributors might opt to stock cylinders from both suppliers. We just want to ensure that we have smart trucks of our own, with distributors who do not overcharge, who abide by safe practices. The distributors are third parties who buy from us, add a mark up of €1.60 (for a 12-kg cylinder), and sell them on to the consumer... We get very upset when clients complain about underweight cylinders or unhelpful distributors because we are blamed even though we have no control.”

Liquigas and Easygas have been at loggerheads since the rival company set up – with the main issue being ownership of the cylinders, as people would return an empty Liquigas cylinder and take a full Easygas one – or vice versa. This has now been sorted – albeit through an uneasy truce – with cylinders being returned to their respective companies every now and then.

But Mr Capelluto was adamant that it is happy to have competition, and has even offered to let Easygas buy gas from its sister company Gasco, and to use its testing facility.

In his eyes, the issue is simple: Liquigas believes that unless a more customer-friendly way of distributing gas is found, demand will fall, in particular when electricity costs fall in a few years’ time.

“At the moment, electricity is much more expensive but once the prices go down, the gap will narrow. So if we want people to use gas for heating and cooking, we need to make sure that they can get cylinders in a very convenient way,” he said, adding that since last month, customers can call to order cylinder deliveries to their door.

It also has its eye on encouraging other uses for gas, such as air conditioning.

Liquigas was granted a licence in 2008 for the operation of a gas plant and the distribution of cylinders. It faced a number of hurdles – one of the main ones being the relocation of the storage and filling plant from the heavily populated Qajjenza area. It took until 2010 for the Malta Environment and Planning Authority to issue a permit for the new 77,000 square-metre site in Bengħajsa – and it was only in 2013 that degassing and dismantling of Qajjenza could finally begin.

The next investment was in a testing plant, opened two weeks ago, which has a capacity of 50,000 cylinders a year.

“Gas cylinders must be tested and certified every 10 years – but this was not being done, as there is no testing facility in Malta and it was very expensive to send them to Sicily, especially since they cannot be sent on a ferry. Once we took over, we started an intense programme to test and certify them; over half of them were beyond repair and had to be scrapped,” Mr Capelluto said.

“We have sorted out a number of issues but now we want to make sure that customers reap the full benefit of our investment. Let me make myself very clear. The distribution part of our licence is something that we insisted on from day one. We want to control the whole supply chain. We want to be able to sell our product to our client. We did not come to Malta to ship and store gas.

“The previous government did not tackle this issue. And now we want to make sure that this Government understands the issue: distribution should not be according to exclusive territory. This is unacceptable and it is a breach of our licensing agreement. Our Dutch partners, SHV, would find it very hard to comprehend that a government is reneging on its part of the deal when the company has gone ahead with its investment.”

vanessa.macdonald@timesofmalta.com