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Private oil supplier mulls price hikes for next month

Formosa Petrochemical Corp (台塑), the nation's sole private fuel supplier, called on the government yesterday to end its freeze on fuel prices, adding that it could raise its fuel prices next month.

"The government and the public should face reality. We live in an era of high oil prices and their efforts to freeze prices will not solve the problem," company spokesman Lin Keh- yen (林克彥) said.

"We hope the government will allow the industry to resume its own pricing system [that is tied to fluctuations in crude prices]," Lin said.

He added that "Formosa Petrochemical did not rule out the possibility of increasing prices for its products in March."

The government has barred any oil price hikes by the company's rival, state-run CPC Corp Taiwan (台灣中油), making it difficult for Formosa Petrochemical to unilaterally raise its prices.

As the international crude oil prices surged to US$100 per barrel on Tuesday, domestic gasoline and diesel prices for next month should be raised by NT$2.20 and NT$2.50 per liter respectively, Lin said.

The government-imposed freeze on fuel prices, Lin said, had reduced company profit by about NT$1 billion (US$31.75 million) per month.

If the government allows a fuel price hike, Formosa Petrochemical would prioritize supply for the domestic market before exporting to overseas markets, he said.

Forty-five percent of the company's products are sold domestically, Lin said.

CPC imtroduced a floating pricing mechanism in January last year that adjusted prices every week in response to crude oil price changes in the world market.

The system was replaced in September by a monthly adjustment formula.

The Ministry of Economic Affairs ordered a freeze on the mechanism in November amid fears that rising fuel prices would fan inflationary pressure.
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