Ho Tung delays gas station foray

Ho Tung Chemical Corp (和桐化學) is delaying plans to enter the retail gasoline market due to intense competition in the newly-liberalized market, that has forced down prices by about 5 percent in the last six months.

According to a company spokesman, Ho Tung had originally planned to begin selling gasoline retail by the end of June, but decided to postpone the move due to low prices.

"Price is a major factor in determining when we enter the market," said the spokesperson.

In the last 6 months, gasoline prices have fallen by around NT$1, due to intense competition between recent market entrant Formosa Petrochemical Corp (台塑石化), Taiwan Esso Corp (台灣埃索) and former monopoly Chinese Petroleum Corp (中油).

The current prices for 95 and 98 unleaded gasoline average NT$18.2 and NT$19.5 per liter, respectively, at gas stations around Taipei.

Delays in construction of a receiving dock in Taichung Harbor and in the issuance of a license to sell gasoline from the Energy Commission, under the Ministry of Economic Affairs, also contributed to the postponement.

A Chinese-language newspaper yesterday quoted Ho Tung's president, Stephen Wang (王銀龍), as saying that the market currently is changing too quickly.

"If we were to enter the market now, the more gasoline we sold the more we would lose," he said.

The report said the company estimates that it would lose around NT$2 for every liter of gasoline sold at current prices.

Ho Tung has already completed its Taichung Harbor receiving dock along with storage facilities for around 1.29 million kiloliters. The company had said it wanted to expand that out to 38.1 million kiloliters once it started its retail operations.

Another factor possibly stalling Ho Tung's entry is its inability to secure a supplier. According to the spokesman, Ho Tung has yet to nail down a supplier, saying only that they were still in talks with foreign and domestic firms, including Chinese Petroleum.

But despite the setback, Ho Tung is reportedly still on track to make around 80 percent of its revenue target of NT$13.7 billion this year and will go ahead with a NT$4 billion project to build its own refinery in Taichung Harbor.

Established on Aug. 1, 1980, Ho Tung listed on the TAIEX on Aug. 30, 1991. Ho Tung is currently Taiwan's only manufacturer of normal paraffin while acetylene has been another of its major products in active production since 1995.