Rival firm sides with Towngas to stop cap

PUBLISHED : Monday, 25 September, 1995, 12:00am
UPDATED : Monday, 25 September, 1995, 12:00am

THE Consumer Council's attempt to cap Towngas prices has hit another hurdle with rival Caltex Oil weighing in on the side of the utility.

In a submission to the Economic Services Branch last week, Caltex said: 'We are very disappointed with the report as a whole because it fails to address the real issue behind the lack of true competition between Towngas and LPG [liquefied petroleum gas].' Caltex said the company objected to the idea of capping Towngas prices.

'We believe competition can be introduced to the market and it will be best for the Government to adopt a laissez-faire, non-interventionist policy and let market forces rule,' a spokesman said.

'The Government should endeavour to encourage competition and regulation should be introduced only when competition is impossible.' Caltex believed there were 'viable alternatives other than regulating Towngas'.

In July the Consumer Council released its two-year study on competition in the domestic water-heater and cooking fuel market.

It said lax government controls had allowed Towngas to reap unjustified profits. Towngas had secured 66 per cent of the market, and for many households was the only feasible fuel for cooking.

The branch, which has to respond to the plan by the end of 1995, is seeking views from all fuel companies.

Caltex said the real issue was the 'discriminatory regulatory framework which unfairly restricts the distribution of LPG to the advantage of Towngas'.

It accused the council of accepting this unfair framework as fait accompli.

The firm reiterated its objection to the Housing Authority's directive that bulk LPG supply would only be considered in public housing where Towngas was not available.

It also objected to the regulation by the Gas Standards Office which prohibited LPG piping from crossing public roads.

'While safety must be the paramount consideration in our business, there is the possibility that standards arbitrarily pushed to the extreme may have negative repercussions on the competitive environment simply by excluding what might otherwise be worthy competitors from the outset.'