British Bas(Pronounce Bas as you say for Gas)
‘Lower than British Bas’….those who watch the advertisement by British Gas’s competitor might understand this…hehe.
Last night, while eating supper with a friend of mine,I watched a documentary presented by BBC about the British energy industry. This documentary is mainly about the hike in energy price. In Britain, where many energy companies competing with each other to gain market share, pricing strategy is very crucial. This can evidently be seen from their advertisement in television.
In contrast, in some countries this phenomenon does not happen. To make thing worse, majority of the people in those countries are so insensitive regarding to this matter. The decision of British Gas to increase price despite of more than £600m profit received so many critics among British medias, particularly BBC. British Gas was accused of being greedy by increasing price of gas. And the result from this, many households now opt to change their utility provider from British Gas to other companies. This is what so good about not having a monopolistic industry, where competition makes companies keep their price down, and improve their product or service in order to capture more market share.
However in some countries, this industry is legally monopolised. This is perfectly understandable as this industry can also be categorised as a natural monopolistic industry. It is natural for this industry to be monopolised by one company because of the super high fixed cost, which requires a very large market share in order to recover the cost of investment, otherwise it is not worth to set up business to serve the market. This is where the word ‘natural’ comes from.
However, natural monolistic industry is not without its demerit. First and foremost, the market failure that occurs in the process of the monopolist setting prices. This kind of monopolist has nothing to fear in the case of them raising price. For them, ‘if you cannot afford the higher price, we wouldn’t serve you. Other than you there are higher purchasing power customers that are willing to pay at that tariff price.’
In addition to that, from my humble observation in my country, the service provided by monopolist in this industry can be said to be lower in quality than the service provided by companies in competitive market in other countries. Take Britain for example. In Britain, statistically nationwide blackout is very remote, probably once in twenty years. Back in the country where I was borned, nationwide blackout can be said to happen once a year. Not to be ungrateful, this is shame as so much money is wasted in paying compensation to businesses that suffered because of the power failure. Waste of money should be the last thing that need to be done especially when this national utility company is facing a dramatic increase in oil and coal.
What moves me to write this entry is the fact that this company’s net profit was RM1,280 million, thats RM1.28 billion(approximately $349.2 million) in the fiscal year 2005, an increase of 57.3% over the fiscal year 2004. Thanks to God, with the appointment of the new CEO, the quality of services has increased, number of blackouts has been reduced, but not as fast as the increase in tariff. And we are still happy with the increment of tariff price, and the media still saying that the increase of price is reasonable because of the ultimate reason=increase in oil price…
how rich we are….
