CONSUMERS should expect to pay a new price for gas in the next two to three weeks with the Fiji Commerce Commission moving in to control the item.
Attorney-General and Trade and Industry Minister, Aiyaz Sayed-Khaiyum yesterday stated that the current prices of gas - for cooking or motor vehicles — would remain until the commission made its decision.
The decision to impose price control on liquefied petroleum gas followed an extensive study by the commission, its chairman Doctor Mahendra Reddy confirmed.
Dr Reddy said the results of the study showed there was distortion in the market. First, he said, there were only two suppliers with one controlling 70 per cent of the market. In addition, household consumers did not have any power to negotiate prices as opposed to bulk buyers and as such they had "no way out".
There are three sectors that use LPG- households, bulk buyers and motor vehicles.
Dr Reddy said their research was so extensive that all they had to do now was receive submissions from the suppliers before determining the prices.
Cooking gas is now retailing for as much as $55 per 12 or 13kg cylinder in urban centres in Viti Levu while it is higher in rural and outer islands.
LPG for motor vehicles is retailing at $2.05 a litre in urban Viti Levu.
Dr Reddy said the commission felt it needed to impose controls as the current price setting was not working, which was a "leader, follower" model or the Stackelberg model.
In this duopoly model, the leader firm moves first and then the follower firm moves sequentially and they compete on quantity. Once the two quantities are chosen, price is set to clear the market.
Dr Reddy said they had studied the prices of LPG in Saudi Arabia and saw that it had been decreasing in the past 10 years but it was not the same for Fiji.
He added that the new gas prices could be an impetus for people to use gas cars.