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Formosa to hike wholesale diesel, gas prices today

Amid soaring international crude oil prices, Formosa Petrochemical Corp (台塑石化), the nation's only publicly traded oil refiner, said yesterday that it would raise its wholesale gasoline and diesel prices by NT$2.8 and NT$3.1 per liter today.

Formosa Petrochemical said that, as the price of crude oil imported from Dubai had increased by 25.3 percent from US$77.12 per barrel last October to an average of US$96.64 per barrel this month, the company's crude oil costs were exceeding its net selling price of domestic gasoline.

"Unlike the state-run CPC Corp, Taiwan [CPC, 台灣中油], which sells most of its gasoline locally and which receives tax subsidies from the government, Formosa Petrochemical has to take our shareholders' equity into consideration," Formosa Petrochemical spokesman Lin Keh-yen (林克彥) said in a telephone interview yesterday.

Around 45 percent of Formosa Petrochemical's sales are domestic, while export sales make up the rest, he said.

LOSING CUSTOMERS

Lin said Formosa Petrochemical could lose up to 50 percent of its customers as a result of the company's price hikes.

"The possible losses are hard to estimate," he said.

Formosa Petrochemical might have to raise its gasoline and diesel prices by NT$4 and NT$4.4 per liter to fully reflect the increase in crude oil costs, Lin said.

Nonetheless, taking the appreciation of the New Taiwan dollar into account, the company decided to hike its prices by a lesser amount, Lin said.

Formosa Petrochemical said its net prices of gasoline and diesel were still lower than in neighboring countries, and even the US.

CPC CORP

CPC said yesterday it would maintain its fuel prices at their current levels next month in accordance with the Cabinet's decision earlier this week.

"Judging by our past experience, CPC expects to see an increase of 10 percent in customers shifting from Formosa Petrochemical to our oil products," CPC vice president Chu Shao-hua (朱少華) said by telephone yesterday.

Despite the expected increase in customers, CPC's freeze on fuel prices would increase its losses by NT$420 million (US$13.92 million) per month, Chu said.

The expected surge in demand for CPC's oil products would not pose a problem for the company's supplies, Chu said.

CPC has kept its fuel prices at the same level since last December in a bid to help stabilize domestic consumer prices.

The company is losing around NT$7 billion per month as a result of this policy, Minister of Economic Affairs Steve Chen (陳瑞隆) said on Wednesday.

Formosa Petrochemical has a 22 percent market share, while CPC owns the remaining stake.
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