SOCAR: Major Companies Failed to Timely React to Price Collapse on International Market
Global oil prices have shrunk three times amid the global pandemic.
Prices declined in Georgia’s in retail sector too; however, different prices run at branded and non-branded stations. Naturally, infrastructure is much more developed at branded stations and their interest expenditures are higher too, however, the consumer conduct is sensitive to prices, for example, the price of Regular petrol at non-branded fueling stations starts from 1.40 GEL, while the same products at branded stations is 1.99 GEL.
BM.GE has interviewed SOCAR Georgia Petroleum director general Levan Giorgadze, who tried to explain reasons behind different prices.
“Major companies had more reserves and failed to provide adequate response to price collapse on international markets”, Giorgadze noted regarding cheaper fuel products at non-braded stations.
“Nobody expected oil prices would plunge on global market. We had reserves for about 1.5-2 months. We did not expect such a plunge. The demand shrank twice. Therefore, these reserves became sufficient for 3-4 months, not for 2 months. Therefore, branded companies delayed response to the market prices. Anyway, prices have considerably decrease on the market. For Loyal Card holders, we offer 0,25 GEL discount for petrol and 0.20-GEL discount for diesel. Three points are added per liter that equals to 0,03 GEL.
Non-branded companies managed to faster replace the old reserves. Furthermore, major brands offer additional services to drivers at fueling stations. They have more developed infrastructure. Consequently, they have taken more capital costs. These are economic grounds for the current price difference”, Levan Giorgadze noted.
Despite the mentioned statement, the official statistics reveals that companies have purchased significant volume of oil products on international markets after price collapse.
Namely, in March, Georgia’s petrol and diesel imports constituted 84.4 thousand tons, up 21,1% year on year (+14.7 thousand tons).