Z Energy says it welcomes the Commerce Commission’s draft report on competition in the fuel retail market.
Z chief executive Mike Bennetts says the company supports the intent and process of the study and will continue to participate with the commission.
“We understand how important it is for New Zealanders to be assured that they’re getting a fair deal for fuel and we agree with the commission on a number of points,” he says.
“We agree with the commission that terminal arrangements require updating, something we have advocated for quite some time.
“Z is focused on the future of the industry and we look forward to working with the commission on a model that’s fit for purpose today and tomorrow, and results in the best possible outcome for New Zealand.”
Bennetts says he also agrees with the commission’s sentiment in the draft report that loyalty schemes should act in the best interest of consumers.
“We’ve made it a business priority to ensure that our loyalty programme, Pumped, is simple and easy to access. There’s no minimum spend to get an everyday fuel discount with Pumped and anyone can access it. Three million Kiwis are signed up to Airpoints and 2.8 million are part of Fly Buys.
Profitability
As the study progresses, Z looks forward to understanding more about the methodology and data used by the commission to assess profitability.
“Given the level of investment we make and the risks Z incurs across our operations we don’t believe our returns are unreasonable,” Bennetts says.
“Our profit has a purpose – we invest in New Zealand. We’re a Kiwi company. We’re based here and we’re absolutely committed to Kiwis. 50% of our shareholders are based here in New Zealand, either through KiwiSaver funds or through the approximately 8000 mum and dad shareholders throughout the country.
“There are over 2000 people employed across our network and we invest in their development and their well-being at work. We invest in local communities through programmes like Good in The Hood and we’re also investing in the energy transition, including at our self-funded bio-diesel plan.”
Wholesale market
The draft report discusses the nature of wholesale agreements that Z, BP and Mobil have with ‘third party distributors’. The commission is focussing on the terms of these contracts, and the ways in which these could impact pump prices.
“It’s our position that Z’s wholesale agreements are already negotiated robustly and terms have landed in a place that represents value to both parties. It’s worth noting that distributors do have an ability to compete in the retail fuel market, as evidenced by the well-documented number of competitors entering new regions of New Zealand in recent times,” Bennetts says.
Consumer choice
“Kiwis have a lot of choice when it comes to the type of service they’re after, with more than 1500 service stations throughout the country. Around 38% in the North Island and around 53% in the South Island are branded something other than Caltex, Z, BP or Mobil. People can vote with their feet painlessly – unlike in banking or electricity retail, there are very few barriers to switching service stations.”
Z looks forward to submitting during the consultation process on September 13.
