100 Gas Stations Close On Low Demand over Past Year

TAIPEI, Taiwan -- Around 100 privately operated gas stations have shut down over the past year due to increasing difficulty in maintaining profitability resulting from weaker demand, according to market sources.

There were a total of 2,534 gas stations around the island as of the end of April, selling fuel products supplied by the two major oil refiners — state-run CPC Corp., Taiwan and the privately owned Formosa Petrochemical Corp. The figure was down from 2,619 recorded a year earlier.

Of the total, 2,009 stations are associated with CPC; 645 stations are directly operated by the state-run oil company while 1,364 are franchises. The remaining 525 stations are associated with FPC, including 133 stations directly run by the firm.

Market insiders said that a major CPC franchiser used to operate more than 100 gas stations around the island, but the figure had fallen sharply to 31 as of the end of April, as it could not cover the sums needed every day to purchase fuel from CPC.

CPC has asked franchised stations that do not offer guarantee funds to pay cash for their fuel purchases. As a result, some franchise operators in poor financial situations have been forced to shut down or suspend some of their gas stations over the past year.

In addition, when renewing contracts with franchisees, CPC has also changed a discount offered to them. It is now NT$0.3-NT$0.4 per liter of fuel purchased, instead of the previous 2-percent discount on the total purchased amount, shrinking profits further.

This, coupled with poor domestic sales of cars caused by the availability of the high-speed rail and mass rapid transit systems, has resulted in a significant decrease in fuel consumption. Annual local car sales have declined to only 360,000 from a peak of 514,000 units, according to CPC.

The state-run refiner started to contract private firms to operate franchised gas stations in 1987. The following 10 years has since been dubbed the “golden decade” for private gas stations. During that time, operating a gas station could bring in daily revenue of over NT$1 million.

After Formosa Petrochemical Corp. joined the oil supply market in 2000, competition heated up among local gas stations, which launched wave after wave of price discount and giveaway campaigns — some even offered free car-washing services.

(chinapost.com.tw, edited byTopco)