Enap and municipalities against Goliath – Energy Magazine

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The pilot project “Gas at a fair price”, consisting of an alliance between Enap and the municipalities to distribute liquefied gas to three thousand homes and at a lower price, was announced by the government last April. Today, in the middle of winter, families continue to wait.

By Marina Parisi, Energy Magazine

Santiago de Chile.- What is delaying the implementation of the initiative? “The acquisition of more balls,” explains Antonio Rivas, Mayor of Chiguayante and President of the Association of Municipalities for the Preservation of Biodiversity of the Nonguén Territory and other Ecosystems. “But the Ministry of Energy has already given the order, the money is there and the contracts are being drawn up. We hope to soon have all cylinders.”

From the Energy portfolio, the Undersecretary, Julio Maturana, asserts that “we are carrying out all the steps so that the project starts as soon as possible. We hope that during the month of July it will be operating”.

Given that the 20 million cylinders currently circulating in the market are the exclusive property of the Gasco, Abastible and Lipigas companies, the government is obliged to buy its own cylinders. “In fact, it is already acquiring them in the international market, in addition to buying them from Maestranza Chilena”, indicates the mayor.

It should be remembered that these companies registered a 35% increase in their profits in 2021 compared to the previous year, according to a report by the National Economic Prosecutor’s Office. This is because the price of the 15-kilogram cylinder jumped sharply from $18,000 in 2020 to $25,000 last year.

This situation immediately turned on the red alert in several municipalities, who jointly convinced the government to devise a strategy to alleviate the pockets of millions of Chileans.

Thus, a technical work table was formed, made up of the Ministry of Energy, Enap and the Association of Municipalities, where the “Gas at a Fair Price” pilot was shaped.

David could be defeated

According to the report of the National Economic Prosecutor’s Office, Gasco, Abastible and Lipigas account for 97% of the distribution of liquefied gas in Chile. The entity lukewarmly defined this scenario as “improper coordination”, also suggesting the entry of a fourth actor into the market.

“Enap will be the one that will act as the new protagonist, in the wholesale market of liquefied gas”, emphasizes Maturana, “which will allow lower prices. We want this to be sustained in the long term. In fact, Enap will be in charge of filling the cylinders, storing them and carrying out their safety management. The municipalities, meanwhile, will be in charge of distributing them”.

“From the Government we want to make a real transformation to the liquefied gas market and do it well. We want families to have liquefied gas at the lowest possible cost.”

“In the first stage of this pilot, six thousand balls will be delivered to three thousand homes. Then, the idea is to advance in the distribution of 100,000 cylinders and from there to scale up in a robust, competitive and convenient business plan for families”.

But, will Enap and the municipalities be able to level the playing field that today is dominated by the Gasco-Abastible-Lipigas triumvirate? It seems that David could unfortunately be defeated by Goliath in this fight.

Rivas does not share this potential outcome at all. Moreover, the mayor vehemently emphasizes that “I have great faith that our strategy will improve the liquefied gas oligopoly maintained by these three firms and it is the same vision that sustains the more than 200 mayors who are participating in this project.”

“Of course, with the first six thousand balls and then the 100 thousand that we are going to deliver, there is little balance that we are going to achieve. However, within a year and a half we intend to distribute 500 thousand cylinders, to reach two million”.

Portability is the solution

“The important thing is that, in parallel with the delivery of hydrocarbons at a more accessible price, we are working on a law that aims at the portability of the ball,” Rivas details.

“That is to say, that the user who buys the cylinder automatically becomes its owner. This is the underlying issue that the pilot Gas at a Fair Price is committed to solving and the great objective that we have outlined in our technical work table”.

“The positive effect of the above is that any individual or company will be able to go to one of Enap’s refiners and fill their cylinder. What happens today is that the ears of the ball bear the name of the company, which means that only Gasco, Abastible and Lipigas can fill these cylinders and no one else can.”

This situation is an obvious delay, says the mayor. “In other countries, both people and companies go to the gas station to fill their balloons. Here is the trap that allows the excessive profit of these three companies”.

Meanwhile, the first communes to benefit from Gas at a Fair Price will be San Fernando, Quinteros and Chiguayante, advances the mayor, “always favoring the most vulnerable households.”

I have to hope that the initiative starts soon and comes to fruition. It would be a triumph for a country like ours, where oligopolies reign without problems and for a long time.

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