South Korea: Government Suffers Setback in Discount Station Plan
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Thursday, 15 December 2011 |
The Government of South Korea has suffered a fresh setback in its plan to introduce low-priced fuel service stations. The plan, announced in July, called for the conversion of roughly 1,300 stations (10% of the country’s total) into discount outlets by 2015. The Korea National Oil Corporation and state-funded agricultural bank Nonghyup, charged with running the plan, aimed to secure bulk discounts that would allow a reduction of 100 won per litre.
However, three refiners – SK Energy, GS Caltex and S-Oil – have failed to offer prices at a sufficiently low level to make the scheme viable in time for a revised December 8 deadline. “The government is trying to bring in supplies for low prices and refiners want to sell it at higher margins,” said a Ministry of Knowledge Economy official. The Government is negotiating with all four major refiners, including Hyundai Oilbank, and considering other options including importation of fuel.
The project is the latest in a series of measures the Government has taken to try and rein in the four largest oil refiners, who jointly control 90% of the country’s fuel supply. The four companies were fined 434.8bn won by antitrust regulators for collusion in May. However, the Korea Oil Station Association has criticised the plan for discount stations. “The profit margin of gas stations is not high and the latest proposal for discount stations can only be seen as a move to exert control over the market,” said a spokesperson.
PetrolWorld 15122011
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