Liquefied Petroleum Gas (LPG), as well as Natural Gas (NG) is imported to Chile mainly from Argentina and the United States through the sea. It arrives in the country at two regasification plants: the one in Quintero and the one in Mejillones, where it is processed and introduced into cylinders for domestic consumption. However, only three companies monopolise gas distribution, of which Metrogas, owned by Gasco S.A., has more than half of the market.
By Andrés Figueroa Cornejo
After recently issuing a study of high social impact, the Economic Prosecutor’s Office (FNE) detected serious irregularities in the gas distribution industry, among whose assertions is that the retail price of each cylinder of liquefied gas should be 15% lower than the current one, and the price of natural gas paid by Metrogas users should be 20% cheaper.
The National Economic Prosecutor, Ricardo Riesco, said, “This study confirms that the gas market is not sufficiently competitive and our recommendations seek to change this situation as soon as possible for the benefit of consumers, because we are convinced that prices can be significantly lower in the future if regulation is adjusted”.
The Preliminary Report of its sixth Market Study, where the FNE addressed the gas market in Chile in the period between 2010 and 2020, focused on the social groups that use liquefied petroleum gas and natural gas.
To develop the study, the FNE collected unpublished data on the gas market in the country and was advised by academics Juan Pablo Montero, from the Catholic University of Chile, and Eduardo Saavedra, from the Alberto Hurtado University, as well as Oxford University economist Christopher Decker.
The FNE calculated that, due to the concentration of the LPG market, private wholesale distributors of this energy increased their annual profits by up to 55% more than those obtained in 2014, which is equivalent to US$ 261 million “extra” annual profits.
On the other hand, the Prosecutor’s Office detected that an exception contained in the last reform to the Gas Services Law, in June 2017, allowed Metrogas, through Agesa, a company not subject to regulation, to increase the price of its NG distribution service to consumers.
This resulted, since February 2017, in an increase of up to 20% in the price of residential natural gas paid by Metrogas customers, equivalent to US$ 87 million per year.
The case of Gasco S.A.
The Gasco corporation, harshly treated by the National Economic Prosecutor’s Office along with Lipigas and Abastible, and company that takes the majority share of the business, said that the proposal of the entity, “could end up seriously damaging the quality of service and also the price of gas in the country”, without offering any explanation of how and why it shot up prices.
On the other hand, Patricio Tapia Gómez and Solange Bustos, leaders of the Sindicato Nacional Interempresa de Trabajadores del Gas, were the ones who led the 21-day strike of the Gasco LPG Workers’ Union, from 19 December 2017 to 8 January 2018. It was a historic strike because it was the first and only one so far in the more than 160 years of existence of the company.
The president of the company, then and now, is Matías Pérez Cruz, a staunch pinochetista, anti-unionist, fan of the neo-fascist presidential candidate José Antonio Kast, and who became infamous on 6 February 2019 when a video went viral showing him expelling three women in an arrogant and violent manner from what he called “his garden”, on the shores of Lake Ranco.
Now, the leaders pointed out that, “Unlike the state’s public health system, when a person stops paying the gas bill, the company immediately shuts off the supply. What happens then? When private gas corporations cut off the gas for non-payment, they simply cease to be “strategic companies”. In other words, they lose their status as an “essential company” that provides a “basic service of public utility”. Where the market rules, there are no more “strategic basic services”, because in the case of gas, it is a product that only those who have the means to buy it can buy. Its supply is not guaranteed as a social right. Moreover, if someone cannot buy gas from a private company “A”, they can buy it from company “B”, because in Chile there is supposed to be free competition”.
Patricio Tapia and Solange Bustos, who come from Gasco, explained that, “Gasco is divided into two companies: Gasco S.A., which corresponds to the administrative body, and Gasco GLP, which is the operational or production part. Chile lacks its own gas to supply the domestic market. The productive part is the workers who mix the raw materials coming from abroad via ships arriving at the Quintero plant, fill the cylinders with this mixture, and distribute the cylinders to customers in trucks and vehicles. The cost of the gas that arrives at the port in frozen form, Gasco S.A. buys at a price infinitely lower than the gas it then sells to other firms and to consumers in general”.
The union representatives, given the situation of the collusion of gas prices, which operates as a true monopoly, indicated that they are preparing a proposal at the national level, “where they seriously study and according to the criteria of basic services as social rights, the establishment of a public company in the area that transfers specialised workers who today work for private companies in terrible conditions, to this eventual public industry; and that representatives of users’ committees, who can be elected and revocable, supervise any possible irregularities that may arise, always under the principle of the common good”.
Likewise, the leaders expressed that the Gasco company is a scandalous part of the gas collusion, as made visible by the investigation carried out by the FNE, exposing the illegal and fraudulent ways it uses to obtain its multi-million profits at the expense of the social majorities and consumers, in the midst of an unprecedented economic, social and health crisis. Likewise, the company headed by Pérez Cruz has made a large part of its profits by exploiting workers and systematically destroying trade union organisation, they said.
Tapia and Bustos said that after their historic strike, and as an exemplary punishment, the company took away the most important benefits they had won, such as “the Gas Workers’ Welfare Corporation (Cobegas), which had two funds: a pension fund that granted former employees a pension complementary to the legal pension, and a Medical Service Fund that functioned as Medical Insurance, which was not conditioned by pre-existing conditions, was not deductible and to which retirees could belong until their death and their widows could continue with the insurance”. They added that, “today, members who are Gasco workers are obliged to join the company’s complementary insurance, which does have deductibles and age limits, and some of its coverage is lower, and retirees cannot belong to it. The president of Cobegas, Lorena Matamala, who is a leader of Gasco’s Union 3, personally called on workers to switch to the company’s health insurance in order to exterminate Cobegas’ insurance. Both insurances were financed by a contribution from the company and a contribution from the worker-member. For example, the company contributed 1.4% of the taxable remuneration to the health insurance. All of this ended.
“Gasco’s anti-union practices add up to a whole chapter of infamy against the interests of the workers”, the leaders declared.