Fri, Feb 29, 2008 - Page 12 News List

CPC maintains freeze on fuel prices

CABINET ORDER The state oil refiner said that with global oil prices soaring, it had racked up NT$13 billion in losses since November, the last time it increased prices


State-run CPC Corp, Taiwan (CPC, 台灣中油) said yesterday that wholesale fuel prices would remain unchanged next month following a Cabinet decision late on Wednesday to continue freezing prices.

"The CPC does not have any plan to raise prices. Nonetheless, the company will continue to closely monitor fluctuations in international crude oil prices over the next two days," CPC vice president Chu Shao-hua (朱少華) told the Taipei Times by telephone.

The Cabinet said it had decided to "continue freezing domestic oil prices in March" in a statement posted on its Web site.

The Cabinet's decision came after Premier Chang Chun-hsiung (張俊雄) hosted a Price Stabilization Commission meeting on Wednesday in light of the 124 percent year-on-year surge in prices of imported commodities this month.

Still, CPC is under pressure to raise prices as the company has suffered a cumulative loss of NT$13 billion (US$420.3 million) since November, when it last raised prices to reflect soaring costs, Chu said.

The company posted a net income of NT$800 billion last year, up slightly from approximately NT$780 billion in 2006, he said.

"If CPC were to increase prices, it would be around NT$2.5 per liter" for both gasoline and diesel oil products, Chu said.

Crude oil prices hovered around US$100 per barrel in Asian trading yesterday.

The CPC introduced a floating price mechanism in January last year in a bid to adjust its prices in accordance with changes in international crude oil prices.

But the firm, under the instruction of the government, revised the mechanism late last year, and is now barred from raising prices if the cumulative ratio of the price increase has exceeded 12 percent on a monthly basis.

The new measure also makes it difficult for CPC's sole competitor, Formosa Petrochemical Corp (台塑石化), to increase prices.

"Formosa Petrochemical has not yet decided whether to increase oil prices or not," Matiz Lin (林明憲), public relations officer for Formosa Petrochemical, said by telephone yesterday.

"The final decision will be made during a meeting next week," Lin said.

Last week, Formosa Petrochemical spokesman Lin Keh-yen (林克彥) urged the government to end its freeze on oil prices next month, adding that the company did not rule out increasing prices next month.

The company has seen monthly profits drop by about NT$1 billion following the government's decision to freeze prices, he said at the time.

Formosa may increase its gasoline and diesel oil products by between NT$2.2 and NT$2.5 per liter next month if necessary, Matiz Lin said yesterday.

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