Ukrainian drivers may be deprived of low-cost and environmentally friendly fuel
Despite the introduction of an excise tax and an increased environmental tax, sales of propane-butane in 2011 have increased, and the number of people wishing to fill their cars with it has reached the pre-crisis level. In seven years, the number of filling stations offering liquefied petroleum gas (LPG) has increased more than sevenfold, while the number of brand names has grown to five. But the old problems haven’t been solved. The state does not want to develop the market and does not control it, allowing several companies to cheat taxpayers of hundreds of million hryvnias annually…
The routes and points of transfer of ownership of more than a third of domestic LPG remain unknown. The bulk of the gas sold at auctions at preferential prices, ostensibly to satisfy households’ needs, freely flows to filling stations, and proceeds from its sale go to the pockets of those who are close to the authorities. Reducing the amounts, availability and quality of the Ukrainian resource with non-transparent pricing in the wholesale segment translated into a significant increase in the share of imports, which could reach 35% of consumption this year.
However, it’s early to speak about the death of the domestic LPG market (particularly in the retail segment). Participants in a roundtable meeting organized by the Psyche Center on March 13, 2012, pointed out positive trends as well:
- an increase in the number of multi-fuel stations, motor gas filling stations and modules in Ukraine (by 38% compared to 2009);
- the appearance of branded LPG meeting EN 589:2008 standards;
- the redistribution of Ukrainian consumers’ preferences along the A-95 Euro — A-95 — A-92 — LPG line due to the economic crisis and soaring petrol prices. Out of 800,000 vehicles consuming LPG, about 70% are the cheaper makes: VAZ, GAZ, Moskvich, Daewoo, and other Ukrainian-made or assembled cars which are used, among other things, as taxis. About 25% are vans and trucks – Bogdan, GAZel, IVECO – used to transport milk, bread and other social groups of commodities;
- the launch by fuel market participants of loyalty programs, the introduction of smart cards and coupons for LPG;
- the active development of gas infrastructure predetermined by an increase in transit shipments of LPG through Ukraine (up to 2.8 million tonnes, an 8% rise compared to 2010).
The development of the market was also encouraged by a constructive dialogue between retailers and the Emergencies Ministry officials, which resulted in amendments to instructions that were lacking common sense, which required that all motor gas filling stations and vehicles be equipped with wire communications devices and early warning systems to detect threats of emergency situations, and that all employees have radiation (!) and chemical defense equipment.
You can read full article in journal «Terminal: Oil Review» №11 (597) 19 Mar 2012
