More than 50% of the final price of NGV corresponds to components regulated by the State

Unlike LPG, diesel or gasoline, NGV is a fuel with a stable price, this because more than 50% of the final price paid by the end user corresponds to components regulated by the State. This structure allows users in Lima and Callao to access said product with a similar final price, regardless of where it is located.

One of the main reasons why NGV has such stability in its price is that this fuel is produced in the country, unlike the others that cannot be produced sufficiently and, therefore, must be imported.

Similarly, the first activities in the value chain (production, transport and wholesale distribution) are carried out by concession companies, which are subject to tariff regulation. This allows the same operating costs to exist for those who sell NGV.

“In contrast to these first stages of the process, the commercialization of NGV takes place in a highly competitive environment, since there is a high supply of service stations that, on many occasions, are located within a short distance, so that the consumer has the ease of substituting one for the other ”, pointed out Gonzalo Tamayo, managing partner of Macroconsult.

He also added that it should be considered that in Peru there is only one presentation of NGV and, as it is defined as a commodity, there is a restriction to differentiate the product, as is the case with gasoline and diesel. For its part, there is price transparency, since service stations are obliged to publish on visible and luminous panels the prices of sale to the public of all available fuels, which are also reported on the Osinergmin web portal.

“Under this context, service stations determine their prices under three indicators: geographical environment where they are located, promotions or offers applied, and additional services provided to the user, such as convenience stores,” Tamayo said.

The massification of gas as an opportunity to promote NGV

The Government has recently proposed regulatory changes (Ministerial Resolution No. 029-2021-MINEM / DM) in order to promote the massification of gas throughout the country. In the case of NGV, it is necessary to deploy greater incentives to extend its commercialization nationwide.

“To achieve this massification, it is necessary to create a public-private work agenda in which, mainly, users are encouraged, through subsidies or other incentives, to convert their cars to NGV. This will allow the development of a high demand and, consequently, a high interest in private investment ”, Tamayo highlighted.

As it is recalled, in the country there are no structural barriers that limit or hinder the entry of new competitors to the NGV market, therefore, in the face of a greater demand for this fuel, a greater supply is also promoted, which will contribute to the price remain highly competitive and highly accessible to the end user.