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LCQ19 : Liquefied petroleum gas prices at dedicated LPG filling stations

Following is a question by the Hon Albert Chan and a written reply by the Secretary for the Environment, Transport and Works, Dr Sarah Liao, at the Legislative Council meeting today (May 23) :

 

Question :

 

Recently, some members of the public have relayed to me that liquefied petroleum gas (LPG) prices at dedicated LPG filling stations had increased in the first two months of this year, despite the fact that the average import unit value of LPG has dropped in recent months from its peak in January this year, and the difference between LPG prices at dedicated and non-dedicated LPG filling stations is widening.  In this connection, will the Government inform this Council:

 

(a)  of the reasons for the increase in LPG prices at dedicated LPG filling stations in the first two months of this year;

 

(b)  whether there are measures to regulate LPG prices at dedicated LPG filling stations; if so, of the details of such measures; if not, the reasons for that; and

 

(c)  whether it will adopt new measures to limit the increase in LPG prices at dedicated LPG filling stations; if so, of the details of such measures; if not, the reasons for that?

 

Reply :

 

Madam President,

 

While non-dedicated liquefied petroleum gas (LPG) filling stations can change their prices freely at any time, LPG ceiling prices at dedicated LPG filling stations are adjusted according to a specified pricing formula in their operation contracts signed with the Government.  The pricing formula comprises two elements, namely the LPG international price and the LPG local operating price.  Based on the movement of the LPG international price of the preceding month, the ceiling prices at dedicated LPG filling stations are adjusted upward or downward every month.  Regarding the LPG local operating price, movement in the Composite Consumer Price Index for the previous year as published by the Census and Statistics Department will be used to adjust the LPG ceiling prices at dedicated LPG filling stations on February 1, every year.

 

In December 2006, the LPG international price rose by 11 cents.  Under the LPG ceiling price adjustment mechanism, the LPG ceiling prices at dedicated LPG filling stations were increased by the same amount in January 2007.

 

In January 2007, the LPG international price was further increased by 24 cents.  Meanwhile, the Composite Consumer Price Index for 2006 rose by 2% and the LPG price was increased by about 2 cents per litre accordingly.  As a result, the LPG ceiling prices at dedicated LPG filling stations were increased by a total of about 26 cents per litre in February 2007.

 

When LPG international price subsequently fell by about 8 cents per litre in February and March respectively in 2007, the LPG ceiling prices at dedicated LPG filling stations were reduced by the same amount in March and April.

 

The above shows that LPG prices at dedicated LPG filling stations have always followed LPG international price movements to keep in line with the pricing formula specified in their operation contracts signed with the Government.  Never have LPG prices at dedicated filling stations kept rising when LPG international prices were generally on the decline.  During the past four months, LPG prices at dedicated filling stations were consistently lower than those at non-dedicated ones, and the price difference remained at about 20 cents.  Please see the table at the Annex for details.

 

To help the trade have a clear picture of LPG price changes at dedicated LPG filling stations, details of LPG international prices and LPG ceiling prices at dedicated LPG filling stations are uploaded to the Electrical and Mechanical Services Department's website at http://www.emsd.gov.hk and posted at all dedicated LPG filling stations.

 

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Annex

 

A comparison of average auto LPG prices:

***************************************

 

                 Dedicated LPG Filling          Non-dedicated LPG Filling

                 Stations (HK$/litre)             Stations (HK$/litre)

                 ************************          *****************************

Jan 2007                2.98                                    3.20

Feb 2007                3.24                                    3.39

Mar 2007                3.16                                    3.29

Apr 2007                3.07                                    3.24

 

 

End/Wednesday, May 23, 2007

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