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Slight increase  in price of LPG   |17 May 2021

Slight increase  in price of LPG   
  • New price set at R17.50 per kilo


As of today, Monday May 17, 2021, the price of LPG (liquid petroleum gas) has increased from R15.00 to 17.50 per kilo.

The Seychelles Petroleum Company (Seypec) explains the rationale from the increase as follows:

“Over more than two years, the Seychelles Petroleum Company (Seypec) has incurred a loss of nearly R12 million due to its subsidy on the selling price of LPG gas. The subsidised price of R15.00 rupees which was applied following a request from government in 2019, has been maintained since then, and despite subsequent cargoes costing more, Seypec has had to absorb the loss as a subsidy. This situation has become so unsustainable now, that the national petroleum company has decided to increase the price of this commodity from R15.00 to R17.50 per kilo as from today (Monday May 17).”

LPG has since and is still the only imported energy product that Seypec is subsidising unlike for all other fuel products where the actual cost is being charged to users.




While many will see that as an additional pressure on households and businesses in Seychelles, it is worth noting that the increase is only R2.50 per kg which means that for a household using a 10kg bottle per month, the increase is only R25.

Seypec recognises that this decision to increase the LPG price will impact its customers but stands by the point that it must guarantee its national mandate as an efficient, reliable, and sound company.

“We cannot bear such financial constraints resulting from huge losses as we are putting tremendous budgetary pressures on a company which must ensure the import and distribution of fuel products so indispensable for the economy,”says Sarah Romain, Seypec’s general manager, commercial.

The import of LPG is purchased at least three times a year. In the last quarter of 2020, the cargo purchased gave a retail price of R19.64 per kg, while the recent cargo purchased in March 2021 is more expensive as the price of the commodity had increased by 36% globally and the exchange rate in Seychelles had similarly increased to R21.75 to the US$, representing a 5% increase from November 2020.

Mrs Romain states: “We maintain our support to households and businesses by offering a part subsidisation. The rationale behind our decision is to ease our financial position on this product while continuing to be by the side of our customers. This is shared responsibility as we do what is in line with financial governance. We can be a crowd pleaser but the limit to it is our strict management of resources of a company which operates with best practices. We can foresee the outcry in certain quarters, but we believe we are sustaining prices according to our means.”

The new LPG price increase comes at a time when Seypec claims it is passing all benefits of today’s exchange rate on its fuel products. This comes after more favourable rupee / dollar rate on the latest imports of Mogas and gasoil. What is important to note is that gasoil and unleaded motor gasoline are purchased on average twice a month with a 60 day credit term, while LPG is bought three times a year and is pre-paid.

“We have constantly reduced the price of Mogas and Gasoil since the rupee has started to gain value against the dollar as the purchase is being done more frequently and has to reflect the exchange rate of the day,” Mrs Romain explains. “We always want our customers to take advantage of the market mechanism in terms of pricing. Our customers are benefitting from the reduction in prices at the pumps and since the beginning of May, there has been a drop of R3.69/litre primarily as a result of the rupee appreciating against the dollar. This is our customer-oriented price policy we have adopted for years. We pass on the actual rise or decrease in prices to our customers and on LPG, we go further by granting a subsidy. All this is done without one cent of subsidy from the government treasury and budget allocation.”

The question of increase of prices affecting customers will always be a subject of passion and outcry. Households and businesses will voice out their disappointment while comments on social media will thrill social media. But there is the economic reasoning behind each such important decision. Is any huge loss sustainable? Can a subsidy be maintained at a level when it can endanger a national company? This socio-economic debate is endless.

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