2011 Annual Report - The Commerce Commission

Table: 18 Investigations and Research-2011CommissionResearch ReportIssues/other topics OutcomeInter Island FreightShippingReview Of Fiji FuelPricing Structureand TemplateServices are handicapped by the long distance between sparsely populated islands and the seasonaldemand for the movement of small quantities of cargo and passenger traffic which reaches peak levelsat certain times of the year.The limited revenues available to ship owners place them in a financially difficult situation in which theyare often unable to replace obsolete and sometimes unsafe vessels.Based on the preliminary findings of the relevant market the key recommendations by theCommission are as follows:1. In order to ensure regular domestic shipping services to remote islands an alternative approachwhich could be considered is franchising. Under franchising schemes, the government selectsspecific routes and the minimum frequency of calls and capacity to be provided to selectedlocations over a franchise period, which would not normally be less than one year and couldadvantageously be considerably longer2. Provide basic business training for small and medium-sized entrepreneurs.The review process was initiated by the Commission and prospective dates for completion wereconsidered, however, for a review of such magnitude the timeline set was flexible. In the first phase,submissions from the oil companies were sought As part of the second phase the analysis ofsubmissions were made and research on the various pricing components were done.In the third phase of the consultative process, a draft consultancy paper was released to thestakeholders and on 26 th September, the Commission invited the three major fuel stakeholders for aface-to-face meeting presenting a new pricing model designed for the calculation of fuel prices forcomments and feedback.This was a preliminaryresearch into the inter-Island freight servicesand a thoroughinvestigation and report isplanned for 2012.The review of the FijiFuel Pricing Templateand Structure wasunderway during theyear and is to becompleted in the firstquarter of 2012.Page213of236