By DANIEL KORIMBAO
CUSTOMERS of fuel products have been hit with a price hike by InterOil.
The company has unilaterally decided to raise the price of fuel products in the country, claiming yesterday it could not wait for Government approval any more and continue to suffer losses.
The company said it was losing up to US$3 million (K8.8 million) a month on the current pricing formula, and needed the Government to agree to review the formula.
It said it lost US$12 million (K35 million) in the third quarter to the end of September, and this was making its financiers and bankers nervous.
InterOil outlets in the capital raised their fuel prices at the bowsers on Wednesday from K3.109 per litre to K3.276 (petrol), and K2.586 per litre to K2.816 (diesel).
InterOil confirmed it had gone ahead and raised the prices without approval from price regulator, the Independent Consumer and Competition Commission.
But the Five Mile Service Station in the capital, operated by Mobil, left its prices unchanged at K3.111 per litre (petrol) and K2.656 per litre (diesel).
It is understood Mobil has warned InterOil it is not prepared to buy any more fuel from them at the new price, and would either close its service stations or seek Government approval to get its supplies elsewhere.
InterOil chief operating officer Bill Jasper told The National yesterday it had suffered losses in the last 12 months, and had been in negotiations with the Government to review the pricing formula.
Mr Jasper said the new price it was forced to introduce at the service stations “was the company trying to get back into parity”, and to cover the costs of processing the crude oil at their Napanapa refinery.
He said their bankers had raised concerns about how they could sustain their business at the current price.
“When you buy crude at a certain price, but you a tied to a certain formula, people will ask you, “how can you sustain that?”
The current pricing formula was part of the project agreement negotiated when crude oil was US$30 a barrel. Crude is now around US$97 a barrel,” Mr Jasper said.
He confirmed that Mobil, which has about 30% of the retail market, had protested the hiking of fuel prices.
He denied that they had stopped fuel supply, or shut down the refinery.
He said their tanks at Napanapa were full, and there was also a tanker of refined products on the way.
But InterOil was yesterday accused by former finance minister Chris Haiveta of being a monopoly that was bullying its way around.
Mr Haiveta said the Import Parity Pricing agreed to between InterOil and the government when he was finance minister about 11 years ago, should be reviewed.
Mr Haiveta said the agreed to the pricing formula at the time on the premise that other players like Mobil, Shell and British Petroleum would still be around.
“They’d all been bought out and InterOil was not just producing and supplying, but it had also gone into retailing. It had become a virtual monopoly, and the 30-year agreement needs to be reviewed by the Government,” Mr Haiveta, who is now an advisor to the Prime Minister, said last night.