Fabian Demicoli

Gas Distributors Protest A Month For A Decision To Be Taken

 Earlier on this week, the gas distributors represented by the Malta Chamber of Small and Medium Enterprises decided to protest against the time now being taken by Government to decide on the introduction of  Amendments to Legal Notice 249 of 2008 issued in October 2008 . Legal Notice 249 of 2008 issued then forgot all about the existence of current distributors in the market who had a signed agreement with Enemalta . Enemalta was then the market regulator and also the supplier to the market of this commodity.

 

Enemalta had then signed an agreement with the gas distributors providing area exclusivity to each and every one. This was to make sure that the social aspect of gas distribution was well and truly provided to everywhere in Malta and not only that but also provided to every sector of society living anywhere.

An elderly person in Birgu on a fourth floor had every right to be provided with a service equal to an owner of a bungalow in Attard. To this day this situation in Gas Distribution continues to prevail.The protest early this week came about because one of the companies decided to use its own vehicles in an area where it said that its customers were not being well served.

No documentation was made available to sustain this information. As such Gas Distributors cannot allow a situation where a company just because it was handed a distributor s authorization by MRA , Malta Resources Authority, uses this as a shotgun continuously threatening the livelihoods of these distributors.

 

Both companies have now agreed for a month not to use their vehicles for distribution of LPG cylinders and work with a multiflag sytem, the green or yellow cylinders together with the black cylinder on the same vehicle and its up to the consumer to make the final choice.

Whilst this mode of distribution might not be acceptable to the companies, it is acceptable to the distributors , the community at large and also to the environment. One heavy vehicle distributing gas in each locality is enough.

Of course  the way forward will need a code of ethics to be established for the distributors including times of operation, mode of operation, vehicle upgrades etc. Any distributor who would not oblige will face a grievance board as was the case when Enemalta established their exclusive territories.

Re inventing the wheel is sometimes not an issue. Why re invent the wheel when experience has already shown the best way forward. One would argue for the sake of competition? So is competition about an increase from Euro 5.40 to Euro 17 per cylinder just because Government has not been subsidizing gas LPG for the last three years ?

This only meant that the public at large now spends Euro 20 million to buy 1.2 million cylinders annually instead of Euro 6.5 million three years ago, for the sake of competition? Has Government ever outlined the value of the subsidy when the price was Euro 5.40, ? No never!

Competition is not about providing a service with a higher price just because Government is longer involved. GRTU hopes that we are not subsidizing foreigners or local giants in this industry. Competition or a free market is not about having ten companies selling the same product at different prices but all ten prices are well above the price of when the market was not free. !  In this market the price is established by the Malta Resources Authority. There is no space for collusion unless both importers of LPG cylinders to the market are not complying to their authorisation conditions.

Gas distribution done by a universal distribution system is the way forward in this small island. However if Government feels that it wants to accomodate the earlier promises made to both these authorisation holders and also the distributors, then there is an only way out! Compensate the distributor for loss of exclusivity and then the authroisations holders are responsible for distribution. Of course then this is where competition law or the law of the jungle comes about. A company in a dominanat position would have to oblige to deliver door to door to every corner of Malta but any one else just because he is not in a dominant position would be allowed to go and sell anywhere and everywhere and whenever he wants to. The law of the jungle at its best. And if this happens MRA no longer would issue a maximum retail price.

We will then witness what happenned in southern Italy a few years back. A collusion of three companies in places like Sorrento, Capri and Sardegna brought about astronomical prices of LPG. Of course these companies were caught out eventually and a fine of a handfull of millions had to be paid out to the Italian Authorities. But the public had for a substantial number of years been paying an astronomical price and was never refunded in any way.

This will not happen in Malta, not while GRTU is around and the gas distributors are around with an exclusive area and the MRA is there to issue a maximum retail price to protect the end customer.

Government needs now to put its foot down. Gas distributors want to continue to work.  If the companies importing their LPG cylinders are not ready to come to terms with the distributors or between them, then Government has to put its foot down and decide in the interest of the gas distributors and the end consumers.

We have had enough of big guys and foreigners trying to force Government to bully the self employed. Government needs to give GRTU assurances that SMEs are there to stay, not just on paper but in reality! Currently on many issues this does not seem to be the case. One month will soon pass and by then we hope that Government would have in reality provided SMEs with some peace of mind…..definately at least in this gas sector.

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