How SOCAR Monopolized the Liquefied Gas Market

How SOCAR Monopolized the Liquefied Gas Market

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Increased excise taxes on oil products have considerably led to this price difference, but excise taxes have never increased only on LPG. The excise tax on CNG has risen by about 0.20 GEL. Depending on these circumstances, the requirement for LPG is fast growing. In 2017, experts predicted that LPG was obviously a popular fuel choice in the long-term, as well as at this stage, you\’ll find many refueling stations inside capital. Besides price, LPG removed because of its technical characteristics. Unlike propane, LPG will be the equal of your premium fuel at 95 octane. Additionally, it is rather straightforward to replace a CNG system with an LPG system.

Experts also emphasize LPG\’s safety characteristics. Beka Kemularia, the founding father of the buyer Protection Center, noted that LPG is really a lot safer and many more ecologically clean than gas.

\”It is noticeably safer as compared to natural gas. You must generate a discuss the ecological benefits of LPG. That is a a lot more ecologically clean product than gas main. The retail price was a small problem for many years. The liquefied gas costs are more expensive in comparison with natural gas. Increased excise tax along with an opened oil product market have removed this matter today,\” Kemularia said.

Georgian consumers did not used liquefied gas in decades, despite price and technical advantages, but European countries make use of this fuel as they simply prefer its ecological characteristics. In the past, the fuel was artificially blocked with the support on the government, and consumers had the ability to only use natural gas with low technical properties as well as prices. Together with the support of the former authorities, all LPG import companies were banned besides SOCAR, the only company allowed to import LPG to Georgia. Because of this, the asking price of LPG was considerably beyond that relate to CNG. The protectionist environment made by the last regime with respect to SOCAR chose to make this company an industry monopolist. However, unlike other importers, SOCAR’s product had an unbearably strong smell it will \’t be used in vehicles. Therefore, consumers ignored SOCAR’s LPG along with a preference for CNG, a place through which competition was comparatively higher.

Paata Bairakhtari, the second in command for any Association of Young Financiers and Businessmen (AYFB), knows this economic scheme perfectly. This product enabled SOCAR to turn into truly the only LPG supplier over the Georgian market, he stated.

\”In the period, hothouse conditions were created for assorted companies. The oil products market was obviously a closed market, that has been controlled with the then Defense Minister David Kezerashvili. The LPG market was independent and competitive. Therefore, there was an absolute threat it may take on besides gas, but petrol, this was unacceptable to the then authorities. Consequently, they \”insured\” this risk and blocked all LPG importers, save SOCAR. Their intention ended up make SOCAR a monopolist for the LPG market, including the well-known five companies on petrol and diesel markets. However, they did not take into account peculiar characteristics of SOCAR fuel. I can agree that in this period SOCAR cannot match the existing interest in fuel concerning technical aspects, and, alternatively, SOCAR liquefied gas was obviously a low-quality product and smelled unbearable. Therefore, this project failed and LPG\’s prospects to the Georgian market were neutralized,\” Bairakhtari noted.

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