Revolution on the LPG market

Due to the amendments sealing the fuel market, the whole industry froze in terror. LPG prices from the beginning of holidays increased by as much as 0.20 PLN per litre, and only in the recent week by 0.06 PLN. Analysts uniformly agree it is nearly certain next week prices will also rise.

Recently, the LPG industry froze in terror. All because of the amendments to the energy law passed through the Sejm and already signed by the President. The new regulations will come into force as soon as 2 September.

According to its guidelines, enterprises producing LPG and trading in it with foreign countries within three months of the day the act comes into force are obliged to provide financial collateral in the amount as high as 10 million PLN. This means numerous entities delivering liquid gas from abroad may not be able to meet the requirement and lose their licences.

The actions are to seal the „grey market” and the provisions will regulate the entire fuel market, including LGP. The situation should not cause a direct increase of prices at service stations.

Probably this will not directly cause price hikes at petrol stations. A greater danger concerns the owners of companies with licence for gas trading who will have to provide the collateral, but will not be able to afford it. There is a risk they will have to wind down.

One should expect reshuffling among the entities in the LPG market. The market will be complemented with companies that will be able to take up the role of those whose licences expire. It does not appear, however, there will be a fall in competiveness so abrupt that the LPG prices will increase.

In the view of a BM Reflex analyst, Urszula Cieślak: Despite the hikes we reported this week, the prices of petrol and diesel are still lower than at the beginning of summer holidays. As she adds, price growths at service stations result from higher wholesale prices, which in turn were influenced by this week’s definite hike in the price of oil.

Cieślak is of the opinion that drivers will soon be able to fill up cheaper again. – Perhaps this is a temporary shift of prices and next week the situation will get back to normal. At least when it comes to “95” and diesel – she claims.

According to the experts from Polish Chamber of Liquid Gas (PIGZ), the act was written under the dictate of big companies and big foreign players. Janusz Szczepański, the President of PIGZ, claims this is absolutely not about fighting the grey market. – Inspections are frequent and thorough. Of course, there are frauds, there always and everywhere will be. But on the scale of the entire country there are more fraud schemes involving diesel or regular petrol than LPG – he adds. The President of PIGZ claims that considering the worth of LPG market in Poland and margins of the producers of the fuel, budget losses resulting from tax fraud cannot be extensive. – This is not about budget losses, but about who wants to make money.

– LPG is used everywhere, for example in industry, not only in motor industry – Szczepański explains. He emphasizes that in his opinion it will be big plants and recreational plot owners using gas cylinders filled up at LPG stations that will suffer. – Two years ago, the collateral ideas were successfully pulled back. Today, the ruling party is looking for money for the 500+, among other things, and each million will come in handy – Szczepański claims.