Cooking gas prices not competitive, more evidence for price control

10/04/2012 16:40

A Consumer Council snap survey of cooking gas prices in the Suva, Nasinu and Nausori area has found retailers charging beyond recommended retail prices (RRPs). RRP is the price which the Gas Companies recommends the retailer to sell the product. The intention is to help to standardise prices among locations.

The survey of 22 service stations found 46% (10 outlets) charging more than Fiji Gas’ RRP of $54 for the 12 kg cylinder. Amongst the ten (10) retailers charging beyond $54, six (6) were selling the gas for $55.50, while two were selling it for $55. Two outlets, one in Suva’s CBD and the other in Nasinu were selling the gas for $58.10, which is 8% higher than the $54 RRP. A $4.10 price difference! Two service stations did not sell 12kg Fiji Gas but were selling the same quantity cylinder of Blue Gas priced at $54. One service station in Nasinu charged $51.50 as part of its Easter Specials promotion.

Distance did not matter because one service in Wainibokasi, Nausori was selling 12kg Fiji Gas for $54, while one service station in downtown Suva was selling the same for $58.10. Service stations in and around Suva City were selling gas at around $1.50 higher than outlets in Nabua and Raiwaqa.  With RRP, it is generally expected that the retailers will sell at, or below, the suggested retail price

In the survey prices ranged from $54 to $58.10 and consumers are thus advised to shop around for the best price. Some consumers who prefer to purchase from service stations out of convenience (i.e. they may be using the outlet for other services – e.g. fuel, etc) should consider checking prices in at least two other outlets to get a better price. Consumers can at least save $1 to $4 if they avoid those high price outlets.

The Council has been receiving complaints against retailers who have increased their gas prices beyond the RRP of the gas suppliers. The suppliers and retailers are free to increase prices as they see fit and unfortunately for Fiji’s consumers this is something they have to live with considering the absence of price control in this sector.

The snap survey result reaffirms the Council’s stance that the absence of price control is allowing retailers to charge high prices without considering current economic conditions and high costs of living.

The Council reiterates its call for the Fiji Commerce Commission to intervene to control the substantial market power (SMP) held by Fiji Gas and Blue Gas over the LPG market. The Commerce Commission should conduct a thorough review of the current gas market and establish a price mechanism that would require gas suppliers to move prices in accordance with fluctuations in the international benchmark price (such as the Saudi CP). It will also stop retailers from increasing the price beyond the retail recommended price.