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Auto LPG ceiling prices for dedicated filling stations to adjust downward in April

The Electrical and Mechanical Services Department announced today (March 24) an adjustment of auto liquefied petroleum gas (LPG) ceiling prices for dedicated LPG filling stations from April 1 to April 30, 2006.

A department spokesman said that the adjustment on April 1 reflected the movement of LPG international prices in March.  The adjusted auto LPG ceiling prices for dedicated stations would range from $3.01 to $3.38 per litre which represented a decrease of $0.40 to $0.41 per litre.

"We are happy to see the effect of the new pricing adjustment mechanism which enables the trade to enjoy immediately the benefit of downward adjustment of LPG international price.  Under the new monthly pricing adjustment mechanism, the operators of dedicated LPG filling stations have to adjust auto LPG ceiling price on a monthly basis according to the movement of LPG international price in the previous month. The operators cannot raise prices quickly but lower prices slowly," he said.

The spokesman pointed out that a pricing formula determined the LPG ceiling price for dedicated stations which comprised two elements - the LPG international price and LPG operating price. The values of these two elements are calculated to several decimal places. According to the contract, LPG ceiling price is the sum of these two elements quoted to the nearest cent of auto LPG price.

Since the LPG operating prices of dedicated LPG filling stations are different, the auto LPG ceiling prices of nine stations have decreased by $0.41 and the remaining three stations have decreased by $0.40. Please refer to the table below for details.

Location of          Auto LPG    Auto LPG
Dedicated            Ceiling         Ceiling
LPG Filling          Price            Price
Stations               in April         in March
                          2006             2006
                         (HK$/litre)      (HK$/litre)
Fung Yip Street,       3.38               3.79
Chai Wan
Ngo Cheung Road,   3.38              3.79
West Kowloon
Sham Mong Road,   3.15               3.56
Mei Foo
Yip Wong Road,      3.15               3.56
Tuen Mun
Marsh Road,            3.15               3.55
Wan Chai
Fung Mat Road,       3.10               3.51
Sheung Wan
Wai Lok Street,        3.10              3.51
Kwun Tong
Yuen Chau Tsai,       3.10              3.51
Tai Po
Cheung Yip Street,   3.13              3.54
Kowloon Bay
Kwai On Road,        3.13              3.54
Kwai Chung
Hang Yiu Street,       3.01              3.41
Ma On Shan
Tak Yip Street,        3.01               3.41
Yuen Long

The spokesman added that details of LPG international prices and auto LPG ceiling price of each dedicated LPG filling station were uploaded on the EMSD website http://www.emsd.gov.hk which were also posted at dedicated LPG filling stations to facilitate the trade to monitor the price adjustment.  The public and the trade may refer to the "What's New" in EMSD website for details of the new pricing adjustment mechanism for dedicated LPG filling stations.

Under the Design, Build and Operate contracts for the dedicated LPG filling stations, a pricing formula (P = A + B) determines the LPG ceiling price (P) for dedicated stations.  It comprises two elements, namely the LPG international price (A) and LPG operating price (B). According to the contracts, the LPG international price (A) is a pass-through element.  It is calculated from the monthly contract prices of LPG from Saudi Arabia listed in the Petroleum Argus LPG World publication.  The information in the Petroleum Argus LPG World publication is available in the public domain.

The Petroleum Argus LPG World publication normally announces the Saudi Arabia contract prices of LPG in US dollar per tonne at the beginning of each month.  The LPG international price (A) in HK$/litre is then converted from US$/tonne when the data on monthly US$/HK$ exchange rates published by the Census & Statistics Department are available in the middle of the month.

The operating price (B) for respective dedicated stations was submitted by the operators during the tender stage.  It is the sum of the proposed operating cost and marginal profit. Apart from the yearly adjustment according to the movement of the Composite Consumer Price Index, the operating price is fixed throughout the 21-year contractual period.

Ends/Friday, March 24, 2006