Commission reviewing pricing of petroleum products

Business

THE Independent Consumer and Competition Commission (ICCC) is conducting another petroleum industry pricing review to determine the appropriate wholesale, retail and drum-filling margins for petroleum products for the next regulatory period (2020-2024).
Declared petroleum products are petrol, diesel and kerosene.
ICCC commissioner and chief executive Paulus Ain said the current regulatory arrangements for these declared petroleum products would expire on Dec 31.
“The ICCC encourages the general public, interested stakeholders and fuel wholesalers and retailers to participate in this review process. This is by providing comments or written submissions on the issues outlined in this public notice,” he said.
“Being the administrator of the Prices Regulation Act, the ICCC is responsible for setting the annual wholesale, retail and drum-filling margins, and the monthly retail prices for petrol, diesel and kerosene in the country.”
The process will:

  • Identify any competition issues in the refining market, the wholesale and distribution market, and the retail market for refined petroleum products over the last five years;
  • review the current monitoring arrangements of the import parity price, and domestic road and sea freight; and decide on appropriate forms of regulation for the next regulatory period, should regulation continue;
  • review the current cost build-up of fuel products (petrol, diesel and kerosene) from the Napa Napa refinery through the domestic distribution networks to the retail outlets and identify any inefficiencies that can be addressed as part of this study;
  • review and assess the industry participants’ fixed asset registers to determine an appropriate regulatory asset base to apply in the next price path period for distribution and retail
    assets;
  • review the weighted average cost of capital used in the 2016 final report and recommend changes where necessary;
  • review and assess budget and forecasted information provided by industry participants relating to sales and demand, revenues, operating and maintenance expenditures, and capital expenditures for the forthcoming regulatory period to ensure recovery of efficient costs, at a given level of service quality; and
  • based on the respective forecast revenue requirements, determine the appropriate wholesale, retail, and drum-filling margins for petrol, diesel and kerosene for the next regulatory period.