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LPG price at dedicated stations pegged to international price

The Assistant Director of Electrical and Mechanical Services Department (EMSD), Mr Frank Chan, said today (January 4) that the aim of changing the frequency of price adjustment to once a month at dedicated Liquefied Petroleum Gas (LPG) filling stations is to let the LPG prices follow more closely the movement of international LPG prices.

"It is not possible, therefore, for companies to increase prices quickly and lower prices slowly," Mr Chan said.

He said that in the Government's move to change the adjustment mechanism for LPG prices at dedicated filling stations, all the components of the pricing formula would remain unchanged.  Only the adjustment frequency is changed from once every six months to once monthly.

Mr Chan said that the contract signed with the operators of the dedicated stations stipulated that the Government should monitor the retail prices at dedicated LPG filling stations and review the ceiling price adjustment mechanism every five years.  The recent review and change in the price adjustment mechanism made after the expiry of the first five-year period is totally in line with the contract.

Speaking on a radio programme today, Mr Chan noted that international LPG prices had fluctuated over the past few months.  He pointed out that the LPG pump prices at dedicated filling stations were determined by two elements: international prices and operating costs proposed by the operators. Operating costs are fixed during the 21-year contract period and can only be adjusted according to the Composite Consumer Price Index on a yearly basis.

He said that to maintain an open and fair arrangement, international LPG prices would be announced monthly from now on such that the transport trades could monitor the price adjustments of the dedicated stations.

In view of the long waiting time for refilling at dedicated stations over the past few months, EMSD had closely monitored the operation of the stations, and deployed staff to inspect the stations round-the-clock.  The two operators have promised to make as many filling nozzles operational as possible during peak hours.  Depending on the actual storage, about 70 per cent of filling nozzles can be operational during busy hours.

In response to criticism by some taxi and PLB drivers that the two operators had closed some of the filling nozzles to cut sale, Mr Chan said the LPG sale at the dedicated stations over the past few months had in fact increased by 50 per cent.

Mr Chan said the department would conduct meetings with the operators and transport trade every three months in the future to listen to their views.


Ends/Wednesday, January 4, 2006
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