– By Caroline Falls –
Last year the Australian competition watchdog criticised the Northern Territory Government for its discounted fuel-card arrangement with the region’s biggest fuel retailer Puma.
An Australian Consumer and Competition Commission report shows Darwin fuel retailers making bonanza profits from inflated fuel retail prices and suggests a change in the NT Government’s fuel supply arrangements could help promote competition.
Puma Energy is the biggest player in the Darwin market. Its deal with the NT Government includes a discount of six cents a litre for its fleet vehicles. Other retailers include Woolworths, Coles Express and United.
NT Chief Minister Adam Giles said he would renegotiate the arrangement with Puma in 2017, when it finishes, according to a report in the NT Times.
“That contract has been undertaken some time ago,” Giles was quoted as saying.
The ACCC report showed Darwin motorists paid 10 cents a litre more for unleaded petrol than drivers had in five other major cities over the two years to mid-2014. The report indicates the higher retail prices cost Darwin motorists an additional $9 million a year. Similar price differentials were observed for diesel sales in Darwin, the report noted.
Service stations reaped a bonanza, making as much as $1.2 million net profit per site in the year ended June 30, 2014, about 10 times more than their southern state counterparts, the ACCC report said.
Zico Ilic, owner of the Darwin Fish Markets, which fillets 250,000 tonnes of fish a year, said he spends some $30,000 a year on fuel for his small fleet of delivery vans, passenger vehicles and forklifts. “Fuel is everything, so if the fuel is expensive then everything is expensive,” Ilic said, adding he’d noticed prices had dropped recently.
Certainly, putting the city’s fuel retailers under scrutiny seems to have contributed to recent declines. The price in more recent months has been a few cents a litre less than the average paid in five major cities — Sydney, Melbourne, Brisbane, Adelaide and Perth.
“FUELtrac believes the ACCC inquiry in the NT, along with the Chief Minister’s separate inquiry, contributed to lower fuel margins in the NT,” said John Cowell, a director at FUELtrac, a consultancy contracted by the ACCC to provide fuel prices for the inquiry. “The NT inquiry has had little impact in other markets, notably Brisbane,” Cowell said.
Darwin was the first regional location to be scrutinised by the ACCC under petrol monitoring arrangements launched by the Federal Government in December last year.
“We see three potential benefits from these ‘deep dive’ regional market studies,” said ACCC Chairman Rod Sims. “First, simply providing greater transparency will empower. Second, we could make recommendations for change to some tier of government. Third, we may find a breach of the Competition and Consumer Act that was not otherwise apparent.”