Independent LPG refillers enter VisMin market

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Sunday, April 8, 2012


INDEPENDENT refillers of liquefied petroleum gas (LPG) have started to enter the Visayas and Mindanao markets, in a bid to provide consumers less costly supply of the cooking and auto fuel.

“Independent refillers are putting up a new refilling plant in Metro Cebu. It will likely be operational by midyear,” said Arnel Ty, the representative in Congress of the sectoral party LPG Marketers Association (LPG-MA).

“If the independents can help soften LPG prices in the Visayas and Mindanao by establishing a presence in markets there and competing with the big players, then we will have made a difference in the lives of consumers,” said Ty, a member of the House committee on energy.

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He said the refilling plant would also help create badly needed new jobs.

A market survey by the Department of Energy (DOE) has confirmed Ty’s previous complaint concerning the abnormally high LPG prices in the Visayas and Mindanao.

LPG prices in the Visayas and Mindanao were found to be generally higher by P75 to P100 per 11-kilogram cylinder compared to Luzon, according to a DOE report to the House energy committee.

The findings were based on inspections conducted by DOE field offices in the cities of Cebu, Bacolod, Roxas, Davao, Cagayan de Oro, Iligan and Zamboanga.

The big players have justified their elevated LPG prices in the Visayas and Mindanao by invoking higher distribution and transport costs.

“But this is unacceptable. The big players have terminals in the South, where the LPG is offloaded straight from ocean-going bulk carriers. It is not as if the gas is offloaded in Luzon, and then reshipped all the way to the South,” Ty pointed out.

“When the gas is put in cylinders and moved from terminals to distributors, this is the same operation they have in Luzon. Yet, they claim it costs them more to do the same thing in the South. This is absurd, considering that wages and other costs are usually lower outside Metro Manila,” he added.

Ty attributed the higher prices to the lack of robust market competition, which he said may be partly addressed by the entry of independent refillers.

According to the DOE, Petron Corp. dominates the LPG market in the Visayas with 36.7 percent share; Petronas Energy Philippines Inc, 26.3 percent; Pilipinas Shell Petroleum Corp, 21.2 percent; and Pryce Gases Inc, 15.7 percent; and Total (Philippines) Corp, one-tenth of one percent.

In Mindanao, Petron has 38.3-percent market share; Petronas, 29.3 percent; Pryce, 18 percent; and Shell, 14.4 percent. (PR)

Published in the Sun.Star Cagayan de Oro newspaper on April 08, 2012.

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