China's independent oil firms are unhappy at government plans
for the opening-up of the finished oil wholesaling
sector.?
The Ministry of
Commerce published a proposal on Thursday outlining the
requirements for companies wishing to operate in the finished oil
wholesaling business once the market is freed up next year.
The new policy would require firms wishing to take part have at
least two years' experience in the domestic finished oil retail
market and own, or have shares in, at least 30 gas service
stations.
The proposal also insists firms have oil tanker capacity of at
least 4,000 cubic meters, a registered capital of more than 100
million yuan (US$12 million) and outlines other safety and
environmental protection requirements.
The proposal has triggered complaints from the country's
privately-held oil companies.
"The threshold is too high for us to participate in the
wholesaling market when the finished oil business opens up," said
Zhao Youshan, vice president of China Chamber of Commerce for
Petroleum Industry (CCCPI), the country's first association for
independent oil firms.
"Almost none of the domestic privately-owned oil companies have
30 service stations -- they only have eight to 10 at most," Zhao
told China Daily on Friday.
Independent firms own some 30,000 of the country's total 80,000
gas service stations, but ownership is massively fragmented, he
added.
"Industrial policy in China's oil sector has long suffocated the
aggressive expansion of independent oil firms wanting to join the
finished oil business," said Zhao.
Yu Chun, president of Jiangyin Daxin Petroleum Co. Ltd., a
medium-sized privately-owned oil company in east China's Jiangsu
Province, felt similarly frustrated.
"I'm getting confused about whether the central government is
promoting non-state-owned business in the world's fastest growing
economy or trying to strangle it," he told China Daily on
Friday.
"Few independent firms will be able to survive the new policy,"
Yu said.
Wang Degang, the oil chamber's deputy secretary-general, told
China Daily the association will hold a meeting next Monday
to discuss counter-measures.
Industry analysts said the government's move aims to rationalize
oil business growth. "The government has good reason to raise the
qualifying standards for handling oil wholesaling in China," said
Zhou Fengqi, former director of the Energy Research Institute at
the National Development and Reform Commission.
"The move will force oil firms to restructure into conglomerates
to fend off the inevitable fierce competition from foreign market
players when the oil business opens up," he added.
(China Daily June 4, 2005)