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Following is a question by Hon Audrey Eu and a written reply by the Secretary for the Environment, Mr Edward Yau, in the Legislative Council today (February 18):
Question:
In 2007, there were about 690,000 users of piped and cylinder liquefied petroleum gas (LPG), representing about 29% of the total number of users in the gas fuels market in Hong Kong. Yet, I have recently received complaints that the piped LPG market lacks competition, the transparency of retail prices of piped LPG is low, and such a situation is unfair to consumers. In this connection, will the Government inform this Council:
(a) of the current numbers of piped LPG users and suppliers; and
(b) given that at present, only one LPG supplier has established a mechanism to regularly and openly review LPG prices and release the relevant information, what measures the Government had put in place in the past three years to encourage other piped LPG suppliers to increase the transparency of the setting of LPG prices?
Reply:
President,
(a) As at end 2008, there were four gas supply companies supplying piped LPG to about 214,000 users.
(b) Fuel prices in Hong Kong are determined by individual companies having regard to commercial practices and their operating costs. In a free market economy, the Government does not have the power to dictate fuel prices. Nevertheless, the Government appreciated the impact of LPG prices on the local economy, and encouraged the industry to increase transparency in their pricing.
Regarding the domestic LPG, Shell Hong Kong Limited (Shell), one of the major LPG suppliers in Hong Kong, has voluntarily adopted a pricing mechanism since 1999 to review their prices regularly so as to enhance transparency in their pricing. To reflect more closely LPG price movements in the international market, Shell currently reviews their prices every three months (i.e. in the latter half of January, April, July and October), and reviews their operational costs every twelve months. In each review with a view to setting LPG price, the company will forecast the import prices of the coming three months in light of the latest international LPG price information, and reflect any variation between the actual import prices and the import prices as forecasted in the previous review. Under this mechanism, the Government also monitors whether the adjustment in local price of domestic LPG is reasonable in light of the movements in international LPG prices and local import prices. After each price review, Shell will announce and explain to public the outcome of the review. Although other oil companies have not established any mechanism to regularly and openly review LPG price and release relevant information, according to our information, the adjustment made by other oil companies in the price of piped LPG has been close to that of Shell.
Ends/Wednesday, February 18, 2009
Issued at HKT 12:31
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