PUBLIC NOTICE: 2024 PETROLEUM INDUSTRY PRICING REVIEW – ISSUES PAPER

2024 PETROLEUM INDUSTRY PRICING REVIEW – ISSUES PAPER

NOTICE PURSUANT TO SECTION 25B OF THE PRICES REGULATION ACT

Petroleum products (petrol, diesel and kerosene) were declared by the Treasury Minister for the purpose of price control under Sections 10 and 21 of the Prices Regulation Act (PR Act). Similarly, the domestic road and sea freight carriage of these products were declared for the purpose of price monitoring under Section 32A of the PR Act. Being the administrator of the PR Act, the Independent Consumer and Competition Commission (‘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.

Purpose of the Review

The current regulatory arrangements for these declared petroleum products will expire on 31^st December 2024. Therefore, the ICCC is conducting another Petroleum Industry Pricing Review (‘Review’) to determine the appropriate wholesale, retail and drum-filling margins for the next regulatory period (2025-2029).  Some of the broader issues that will be considered as part of this Review will include but are not limited to the following:

1. a) Identify any competition issues in the (1) refining market, (2) the wholesale and distribution market (3) and the retail market for refined petroleum products over the last five years;
2. b) Review the current monitoring arrangements of the Import Parity Price (IPP), and domestic road and sea freight; and decide on an appropriate form(s) of regulation for the next regulatory period, should regulation continue;
3. c) 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;
4. d) Review and assess the industry participants’ fixed asset registers to determine an appropriate Regulatory Asset Base (RAB) to apply in the next price path period for distribution and retail assets;
5. e) Review the Weighted Average Cost of Capital (‘WACC’) used in the 2019 Final Report and recommend changes where necessary.
6. f) 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;
7. g) Based on the respective forecast revenue requirements, determine the appropriate Wholesale, Retail, and Drum filling margins for petrol, diesel and kerosense for the next regulatory period.

Review Timeframe and Deliverables 

The tentative timeframe for the Review is as follows:

Public and Stakeholder Consultation 

The ICCC endeavours to conduct this Review in an open and transparent manner before making its final determinations. Thus, the ICCC encourages the general public, interested stakeholders and fuel wholesalers and retailers to participate in this Review process by providing comments or written submissions on the issues outlined in this Public Notice which might be relevant for the ICCC to consider as part of this Review. 

Consistent with Section 131 of the ICCC Act, all submissions received will be treated as public information unless certain information is designated as “confidential”. Where information is considered to be commercially sensitive; this must be clearly marked “confidential”. 

All enquiries on this Review should be directed to Mr. Jack Timi – Executive Manager, Prices & Productivity Division or Mr. Thomas Vue – Manager Prices on the telephone number 312 4600 or on email jtimi@iccc.gov.pg or tvue@iccc.gov.pg, respectively.