The main supplier of gas cylinders, Liquigas, has defended the recent price hike saying it was seeking to identify alternative sources to stabilise the cost of this commodity.
Liquigas has adopted a very prudent purchasing policy
In a statement, Liquigas Malta insisted that the only reason behind gas prices shooting up was the increase in international prices.
The company sought to justify the rise following the outcry caused last week, when the price of an average 12kg cylinder rose to €19.70 from €18.
The increase came hot on the heels of a 6c per litre increase in petrol and a 3c per litre hike in diesel.
Liquigas said it had been constantly faced with rising international LPG prices since October 2010, just a few months after it started its operations in Malta.
It clarified that liquefied petroleum gas (LPG) was a different product from natural gas, which comes from natural reserves and is distributed through pipelines directly to households and other end-users, as is the case in most of Europe.
LPG is a different product that is mainly transported by ships, trains and trucks and then distributed in cylinders to households, as is the case in Malta. The price of LPG has remained consistently high since it is partly a by-product of the petroleum industry.
Liquigas added that the weakness of the euro against the dollar also contributed to the price increases since LPG was purchased in dollars. Ongoing speculation on the international market continued to fuel the negative situation, it said.
“Since October 2010, the international LPG price has not only never gone below $800 per tonne in any single month but it hovered around an average of $950 per tonne and this year has not gone below the $1,000 per tonne mark,” Liquigas said.
At times the international price increases were so high it had no other option but to ask for a price increase after submitting the commercial workings to the Malta Resources Authority.
Each time, the new pricing structure had to be set according to the authority’s price mechanism formula and the authorities verified any increases.
The company said there had been times when it absorbed the increased international costs itself.
“Liquigas has adopted a very prudent purchasing policy as the company is fully aware that today it is operating in a totally open and competitive market and that the price of its product and service is neither protected nor subsidised by the government but that such a price has to compete commercially.”
It said it had endeavoured to identify alternative sources of supply outside Europe to mitigate the impact on domestic LPG pricing, while keeping a contingency plan in place to acquire LPG from Italy or France to guarantee continuity of LPG supply in Malta.
It is also looking forward to the time when its storage capacity will double when the new €20 million LPG plant is completed later on this year. The facility in Bengħajsa would reduce the company’s vulnerability to forces outside its control and guarantee adequate supplies for Malta even in difficult wintry conditions, it said.