Formosa retailers seek price talks

Formosa Petrochemical Corp (台塑石化), retailers are to meet with the privately owned oil refiner's top executives tomorrow to discuss the possibility of reducing wholesale fuel prices, an association official said yesterday.

"Chances are very high that we will meet with the management tomorrow," Kao Fu-lai (高福來), chairman of the Formosa Gas Station Association, told the Taipei Times in a telephone interview.

The association is made up around 400 retailers who distribute Formosa Petrochemical's oil products nationwide.

Kao to provide more details of the proposed meeting, saying that association members were still discussing their demands and would complete their suggestions by tonight.

He refuted a Chinese-language newspaper report that association members had met yesterday in Taichung to discuss agenda topics, saying that members had only exchanged views via phone and fax.

Formosa Petrochemical announced a 10 percent hike in wholesale fuel prices as of last Wednesday, which meant an additional NT$2.4 per liter for gasoline products and NT$2 per liter for to diesel oil products.

As state-run Chinese Petroleum Corp (CPC, 中油) did not follow suit, drivers switched to CPC stations to buy their gasoline, leaving Formosa stations deserted.

The first day of the price hike saw businesses at Formosa stations plunge by 67 percent.

Formosa Petrochemical's retailers decided to adjust their prices the next day to stop losses by offering a two-day discount to those who had paid the higher prices, taking NT$0.6 off a liter.

Over the weekend, however, their retail business suffered a 50 percent drop compared with before the hike, Kao said.

However, he expects businesses to gradually pick up, as CPC is expected to raise its wholesale fuel prices this week because soaring crude oil prices are cutting into the company's profits.

According to Chinese-language media reports, the association members are thinking of asking for compensation from Formosa Petrochemical, since its wholesale price hike caused them losses and jeopardized the corporate image by driving customers over to CPC.

As there will be a 10-day grace period for the new wholesale prices to take effect between Formosa Petrochemical and its retailers, association members are expected to negotiate the matter with the company, media reports said.

Formosa are worried that if CPC does not raise its wholesale prices, Formosa Petrochemical will raise its prices again after the grace period ends, further cutting into their declining profits.