Noticias

The National Economic Prosecutor’s Office (FNE) published today the final report of its Market Study on Gas, reiterating the need to carry out a series of reforms to increase competition in this market, which could translate into significant savings for consumers in both the liquefied petroleum gas (LPG) and natural gas (NG) segments.

In the case of liquefied gas, savings can reach US $ 181 million per year, which is equivalent to 15% of the price of each balloon or cylinder sold in our country. Meanwhile, in the case of natural gas, a saving of between US $ 78 million and US $ 87 million is estimated for Metrogas customers, which translates into a reduction of between 13% and 20% of their monthly bills for this fuel. .

“After a year of work, today we are delivering new and very complete information on the gas market, which allows us to affirm, with property, that it is necessary and urgent to implement regulatory and legal changes that promote greater competition both in the business of liquefied gas as well as that of natural gas ”, affirmed the National Economic Prosecutor, Ricardo Riesco.

The final recommendations, which were sent to the Ministry of Energy, aim to perfect the structure of the system and optimize competition and efficiency in both the LPG and NG markets.

The final report was prepared after submitting the preliminary report to a public consultation process in which the FNE received comments from ten market players, including economic reports prepared by experts at the request of Abastible, Gasco, Lipigas and Metrogas. Lipigas also provided an expert legal opinion.

The comments were processed by the FNE and analyzed together with the economists Juan Pablo Montero and Eduardo Saavedra, who advised the institution in this study. In the attached document, called “Comments and Responses,” the FNE summarizes the main criticisms and comments received, the vast majority of which are refuted.

“With the recommendations that we are presenting, the State has an easy and fast regulatory path to lower the price of a product of the greatest relevance to families, such as gas. Each of our proposals is supported by a rigorous analysis of the background provided by the market players themselves and exhaustive econometric analyzes. The changes we propose will make the market more competitive and we trust that they will be the basis for the new regulations that this sector requires”, added Riesco.

Main criticisms and responses of the FNE

• LPG market

In the segment, criticisms of the study are fundamentally divided into four groups: the FNE’s lack of rigor in relevant calculations, such as the margin; negative effect of the FNE’s proposals on service quality and distribution security; unconstitutionality of the recommendations of the FNE; and incompatibility of the FNE’s recommendations with certain agreements entered into by wholesalers to provide discounts to the population.

Regarding the first group of criticisms, related to the fact that the FNE had not been rigorous in relevant calculations, it is pointed out that the FNE would not have adjusted the figures of its study for inflation. In this regard, it should be noted that this is not effective, since all the figures mentioned in the study were always adjusted by the FNE according to the Consumer Price Index (CPI).

Another criticism indicates that the FNE would not have correctly calculated the margin of the LPG wholesale distributors, leaving out a series of costs. In fact, the companies argue that the correct approach would have been to use accounting margins such as EBIT or EBITDA in the study.

However, the FNE calculated the margin according to the information provided by the companies and detailed the way in which it was calculated, being used essentially to demonstrate how the sustained increase in the margin over time, in real terms, is inconsistent with a competitive market.

It should also be noted that since the 1980s the EBIT or EBITDA accounting margin has not been used to measure the level of competition in the markets, since they present a series of insurmountable problems for this purpose.

The second group of criticisms of the study indicates that the FNE’s recommendations, essentially the prohibition of wholesalers from participating in the retail market, would put the quality of service and safety in the market at risk.

According to the FNE, this is unfounded, because today almost 85% of LPG sales are carried out by smaller retail companies (SMEs), which, by contract with the wholesalers, are the ones that assume the commercial risk of the distribution and benefit or harm by the quality of service delivered. In the FNE’s proposal, these same companies would carry out the retail distribution, so there would be no reason why the quality of the service should not be maintained.

The FNE also rules out the reduction of security in the market, because nowadays the same contracts between wholesalers and retailers assign all responsibility for security aspects to retail distributors, so there would be no reason to affect security. market safety. Likewise, both wholesalers and retailers are regulated and supervised by the Superintendency of Electricity and Fuels and, by the way, this is independent of the integration that exists or does not exist in the market.

A third group of criticisms indicates that the FNE’s recommendations would be unconstitutional, which is rejected by the FNE for a series of reasons.

By way of example, the FNE indicates that companies cannot invoke an absolute right to carry out an economic activity regardless of the public interest committed to the proper functioning of the market. This public interest, which is also constitutionally protected, forms an integral part of the economic public order and is recognized in DL 211.

On the other hand, the FNE indicates that the prior inaction of the State to correct failures in a market could not generate legitimate confidence that guarantees regulatory immutability in favor of incumbents. To disprove these observations, the FNE used as a basis a Report on Law prepared by the professor at the University of Chile, Santiago Montt Oyarzún.

Finally, a fourth group of criticisms focuses on the fact that the FNE’s recommendations would prevent incumbents from entering into agreements that grant discounts to the population for the purchase of LPG in the future. Although promotions that alleviate household pockets are always welcome, the FNE rejected these arguments because, if its recommendations are applied, the market will not need this type of “vouchers” or “vouchers” for the price of LPG to decrease, but that this will occur due to the effects of greater competition in the market.

In the opinion of the FNE, a public policy related to a basic good, such as LPG, cannot depend exclusively on the mere will of the companies in the sector.

• Natural gas

In the NG market, the main criticism of the study is that the FNE’s recommendation that the profitability of all distribution companies be calculated considering the entire vertically integrated economic group, would translate into an increase of the costs and therefore the price of natural gas for Metrogas customers.

The FNE dismissed this criticism as unfounded. Indeed, the recommendation of the FNE, in and of itself, does not lead to an increase in the cost of either the costs or the price of the NG distributed by Metrogas to the detriment of its customers, which could only occur because of autonomous decisions inherent to the Metrogas and / or its vertically integrated company that supplies it with GN.

See Final Report

See Annexes

See comments and responses

See Public Contributions