ROBERT YOUNG LOOKED a little tired. The director of Shell, the biggest oil company in Hong Kong, was forced to get down to the nitty-gritty of his business when he went down to a filling station in North Point yesterday afternoon and tried to explain to reporters the difficulties the company faced when implementing the proposed liquefied petroleum gas (LPG) taxi scheme.
This media campaign is certainly not an easy task. Over the past week, the fuel companies have been accused by Lily Yam Kwan Pui-ying, the Secretary for Food and Environment, of being greedy profiteers who care little for the environment. Among the problems Mr Young reeled off were safety concerns, which meant most stations near urban areas could not be switched to LPG. 'This came out all of a sudden,' Mr Young said. 'We have only discussed with the Government general issues over the scheme and there was not even a negotiation. I really don't know why Mrs Yam made these comments through the media.' As part of the push to improve air quality, Mrs Yam's bureau is in charge of persuading 18,000 taxis to swap from using diesel to cleaner LPG. Along with monetary incentives offered to the drivers, she has to ensure the fuel's easy availability - and that means negotiating with the two major fuel supply companies, Shell and Caltex. But Mrs Yam's allegations represent only one of two battlegrounds between the companies and the Government. The Economic Services Bureau, headed by Stephen Ip Shu-kwan, is also trying hard to break the price cartel among fuel companies which has them charging the same price for fuel at the pump.
No matter how hard Mr Young and his team work on his public relations counter-offensive, there is a long battle ahead. And the Government may find it difficult to win this war in the short term, even though it has already secured widespread support. The battle started last year when Mr Ip said oil companies should cut the petrol price after the cost of crude oil fell to a low of less than US$20 (about HK$155) a barrel. There was a public outcry when the companies failed to do so.
The battle intensified in January when the Consumer Council released a report on the fuel market in Hong Kong. It said a clique was at work, which meant prices were the same at every petrol pump, depriving customers of choice. A subcommittee was formed under the Energy Advisory Committee to tackle the issue. It is now working on an action plan to break the cartel.
Now a new battleground has been created, as Chief Executive Tung Chee-hwa wants to improve the SAR's air quality to be comparable with London and New York. The Government plans to switch all 18,000 taxis to operate on LPG, but it largely depends on co-operation from the companies. Oil firms so far have said they will not support the plan unless the Government returns part of the land premium they have already paid for existing fuel stations.
So far the competition subcommittee has suggested several measures to increase competition. They asked the firms to erect price boards at filling stations and spare some oil storage space for newcomers. But the companies said their tanks were full and that prices were already shown on pumps. 'They are very united and arrogant,' a member of the subcommittee said. 'In fact, there is no way we can force them to cut prices. And the issue has now been complicated as the Government needs their help on the LPG taxi scheme.' Caltex, the second-largest oil firm in Hong Kong, so far has said little about the issue. Its public affairs chief, Albert Kwok Pui-ming, has told the media the company also wants the Government to return part of the land premium, but said discussions were on-going. A source close to the Government acknowledged that officials did not have many cards to play. The strongest trump for them is to terminate the lease of filling stations when they expire. However, most companies renewed their leases before 1997. During the next five years, only the lease of one station owned by Shell, in the remote Shek Kong area, will expire.
