Oil companies will be penalised through the petrol station tendering process if a monitoring mechanism to be established before the end of the year establishes that fuel prices go up quickly and come down slowly.
Under the scheme, information updated every week will be put online giving details of average pump prices, average import prices for petrol and diesel, and the Singapore free on board prices for the two fuels. This will allow the public to judge whether pump prices are keeping pace with international fuel prices.
A government source said the FOB prices were better indicators of Asia's fuel trading prices than crude oil.
Chief Executive Donald Tsang Yam-kuen said the government would tighten the tendering process for petrol stations if any irregularity was spotted, but would not elaborate on what that meant.
A transport analyst, Hung Wing-tat, said terminating leases on petrol stations was apparently one option.
'Oil companies cannot function if the government refuses to lease them land for petrol stations,' he said. 'The government could make them promise to follow import prices closer while renewing their leases.'