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Formosa Petrochemical starts freeway operations

Formosa Petrochemical Crop (台塑石化) yesterday officially took over the operation rights of 17 gas stations on or along the Sun Yat-sen Freeway, which it hopes will generate another NT$4 billion annually.

"In addition to providing our quality products at competitive prices, we'll keep advancing our facilities to serve drivers on the freeway," Wang Wen-chao (王文潮), president of Formosa Petrochemical said at the opening ceremony at the Taian Service Station yesterday morning.

In December, Formosa Petrochemical, the country's second-largest oil refiner and supplier, won the rights to operate the 17 stations for a five-year period from the state-run Chinese Petroleum Corp (CPC, 中油). The nation's largest oil supplier had run the stations for more than two decades.

Along with the Hsiluo Service Station that Formosa won operational rights to in November 2002, the company now has 18 outlets on or along the freeway from Nankan Intersection in the north, to Nantzu Intersection in the south and some 550 nationwide.

To lure freeway drivers, Formosa is offering more giveaways and coupons, and has cut diesel oil prices by NT$0.30 per liter at the 18 freeway stations. It said it would accepts CPC's coupons at 120 of its stations.

"We estimate that the 17 stations will bring in 1.2 percent of market share, or NT$4 billion, a year for us," said Formosa's executive vice president Su Chi-yi (蘇啟邑).

"Overall, we hope to reach NT$80 billion in sales this year," he said.

Although the potential income generated by the new stations is not significant, Wang said he believes the move will help boost the company's brand name awareness as there are a huge number of drivers on the freeway everyday.

As gas prices at the highway stations have traditionally been slightly higher than at other stations, Su said Formosa would keep the prices at all its outlets the same. Formosa will also gradually build up the car wash and maintenance facilities at the new stations, he said.

Formosa Petrochemical's promotions, however, have fueled a price war. National Petroleum Corp (全國加油站) last week announced a discount equal to cutting its oil price by NT$2.5 per liter, and diesel oil price by NT$1 per liter in over 80 of its gas stations. The discounts took effect yesterday.

Despite the fierce competition, Nacy Chao (趙愛卿), general manager of Best 21 Marketing Inc (優勢21), a marketing firm for National Petroleum, said that the two newer companies will build up closer ties to compete with the CPC.
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