TIRANA, March 28 – Albania’s Competition Authority has launched a thorough enquiry into the liquid gas market following allegations of abuse of dominant position in a market operating under oligopoly conditions with two companies controlling 70 percent of the market.
The probe comes after a new excise rate imposed on vehicle liquid gas and higher international prices are affecting both business and household consumers who massively used LPG as a cheaper alternative to electricity.
Liquid gas prices have increased by an average of 40 percent to about 70 lek (€0.5)/litre since late December after an 8 lek (€0.06)/litre excise rate was introduced only for liquid gas powered cars, but which is also indirectly affecting household and business consumers, sharply increasing their energy costs.
Liquid gas in Albania is currently imported through two concession ports in Durres and Vlora whose owners are also involved in the storage, import and wholesale trade, raising concerns about the efficiency of the 30-year build-own-transfer concessions awarded in the early 2000s.
The competition watchdog says it will investigate into eight companies including the Romano Port concessionaire just outside Durres and the “La Petrolifera Italo-Albanese” concessionaire in Vlora, southern Albania. The probe covers the May 2015-February 2017 period.
Preliminary findings have unveiled the load, unload, storage and wholesale gas operations at the Romano Port concessionaire outside Durres are carried out through vertically integrated companies which increases their strength and could lead to limitations of competition. Albanian businessman Pirro Bare is the main shareholder in these companies, including the Romano Port 30-year concession which he almost wholly owns.
The Vlora-1 Port operated by the La Petrolifera Italo Rumena concessionaire displays the same behaviour with the concessionaire controlling the import and storage operations.
A&V Gas SHA fully controlled by the Romano Port concessionaire whose majority stake is held by Pirro Bare held a market share of about 37 percent in 2016.
Meanwhile, Albanian-owned Kevin Gaz ShA operating at the Vlora 1 Port had a market share of about 36 percent.
A five-year study has shown the two companies hold 70 percent of the wholesale market, “being inevitable partners for the liquid gas importers and as a result securing their domination in the respective market.”
The competition watchdog says both these companies display coordinated behaviour in the wholesale liquid gas prices and the geographical division of the supply resources which could be a coordinated practice/banned deal as the average difference in purchase and sale prices are almost symmetrical.
Monitoring has shown there are market operators using the same price levels for both vehicle and household consumption, unveiling signs of limited competition, the Competition Authority said in mid-January when it launched a preliminary enquiry into the import, storage, retail and wholesale trade of gas for household and business consumption.
With few authorized gas points for household use, LPG, continues being massively traded in cylinders from the same filling stations for both car and household consumption, despite warnings by authorities to stop sales to households from vehicle gas points in fuel stations.
Liquid gas prices in the few authorized sale points which also provide safer gas cylinders and are responsible for their technical control are even higher than liquid gas traded in petrol stations.
Government officials had assured the new hike would only affect liquid gas powered vehicles, but the early 2017 reality is quite different with households continuing to use their old and not technically controlled gas cylinders to benefit lower gas prices from fuel stations.
Albania is expected to have lower liquid gas prices by 2020 when the Trans Adriatic Pipeline, already in its construction stage in its Albania section, makes the first Caspian gas deliveries to Europe.
Albanians have also been facing higher fuel prices in the first quarter of this year with oil prices having risen to an average of 170 lek/litre (€1.25) making them one of Europe’s highest due to the high tax burden Albania applies. The increase seems to have reflected the latest developments as global fuel prices have picked up to $56 a barrel in early March but recently dropped to about $51 a barrel.
