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Liquigas prices have not yet delivered profits to company, says Gasco chairman
Chairman of Gasco says company does not yet make a profit and gas prices increase and decrease according to international prices, not local competition.
12 July 2012, 12:00am
Farrugia explained that the new facility will allow Gasco to buy butane and propane, the two components that make up liquid petroleum gas, separately rather than buy it ready-mixed.
"There will be benefits," Farrugia explained, when asked about the prices of gas cylinders which Liquigas - Gasco's gas cylinder distribution firm - sells on the market.
As the dominant player on the market, Liquigas prices often determine the minimum retail price as sanctioned by the regulator, the Malta Resources Authority.
Gasco will be doubling the current capacity for LPG storage in Malta to a total storage capacity from the present 2,300 tons to 4,800 tons.
Asked to comment as to whether cheaper gas cylinder prices by the other player on the market, Easygas, were determined by the purchase of smaller and more frequent consignments, Farrugia said he could not comment on the way Easygas was purchasing its gas.
"What I can say is that Liquigas has not made a profit yet," when commenting over the rates at which gas cylinders by his company were being sold. "You can check our results. We have been active for two and a half years and so far, and we have not made any profits despite what everyone has said. Every provider buys gas at a different time and the price of gas is quite volatile," Farrugia said.
He also explained that the regulator oversees that any price set is not exorbitant and a certain margin is established. "You can also sell below the maximum and market price. We have done that in the past. But we also put up the price when the international price goes up. Any conception that we are making any profits is unfounded and you can go and verify it," Farrugia said.
The chairman said that the company was "obviously expecting" with the new storage facility. "Obviously it will be through efficiencies, selling more, and increasing the use of gas. The major change of gas priceswill be due to international prices. It has nothing to do with us."
During a visit to the plant, Prime Minister Lawrence Gonzi said the investment and plant embodied the government's vision and strategy for Malta.
"The investment is a result of our privatisation efforts and has created new employment opportunities for Maltese workers both during the construction of the facility and now once it commences operations," Gonzi said.
Gonzi said the country had "inherited challenges" because of bad decision-making in the past and made reference to the plant in Qajjenza. "The Qajjenza plant ended up in the heart of Birzebbugia sending property values down and posing a risk to human life. Such a plant should not have been surrounded by buildings," he said.
The Gasco facility will allow Malta to benefit from new services such as Auto Liquigas, and air-conditioning using LPG, both contributing to a better environment. "Our economic strategy to allow the private sector to invest in our economy is also an investment in our environment and in our health," Gonzi said.
The CEO of Gasco Energy Roberto Capelluto said the Bengħajsa facility was being constructed according to the highest international standards. "This is to ensure a consistently reliable, safe and environmentally-friendly supply of LPG in Malta. It fully respects the stringent EU criteria as established in the Seveso II Directives."
"Furthermore, at the new Bengħajsa facility, the company will be maximizing the efficiency of gas bottling and storage operations through the application of modern technology and efficient work practices, while ensuring that appropriate quality, environmental and health standards are maintained at all times," said Mr Capelluto.
The Prime Minister was shown around the new facility which includes six new LPG storage tanks, each with a capacity of 800 tons of LPG. Each storage tank is 42 metres long and has a diameter of 7.5metres.
The tanks are currently covered with sand to increase the safety of the installation.
The project comprises a pipeline from the sea importation terminal to the storage tanks, an automatic cylinder filling facility, a road tanker filling point to deliver bulk LPG to Liquigas' clients, and an administration building.