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NEWS - ASIA, MIDDLE EAST & AFRICA ACCC concernED over Caltex’s China deploys aggressive mandates to take lead in eVS $95m Milemaker acquisition Caltex Australia’s $95 million deal to buy Victoria’s Milemaker Petroleum has run into trouble with the competition regulator, which is worried it may cut competition of petrol supply in Melbourne and force up prices. The takeover of the independent chain of 46 sites “may remove a vigorous and effective competitor in retail fuel in Melbourne,” Rod Sims, chair of the Australian Competition and Consumer Commission said. Caltex said it is “working with the ACCC with a view to addressing the preliminary issues” raised by the regulator and it is “confident” of meeting the concerns. But Mr Sims signalled the regulator’s objections to the deal may not be easily overcome. “We’ve put out a statement of issues which always means whether or not we seek to oppose the merger is yet to be decided,” he told The Australia Financial Review. “In this case that’s a particularly finely balanced question.” Mr Sims’ wariness about the deal was welcomed by motorist representative RACV, which said its analysis showed Milemaker sites had consistently lower prices than average in their area. Mr Koenders said that while the ACCC’s concerns “seem valid”, Caltex should be able to make concessions to appease it, involving potentially a guarantee to keep Milemaker’s existing pricing strategy or by making “minor” store divestments. The obstacle for the acquisition has emerged as the ACCC has started examining a much larger deal, BP’s proposed $1.8 billion takeover of Woolworths’ fuel retail network, a transaction that is expected to involve significant competition issues. If the deal completes, Caltex would lose a major fuel sales contract with Woolworths. Citi’s Mr Koenders said that ironically, the ACCC objecting to the Milemaker deal could be good for sentiment around Caltex because it would be difficult for the regulator to then allow BP to acquire the Woolworths network, in which the wholesale supply agreement would continue. The ACCC has tended to take a particular interest in competition and pricing in petrol, with Mr Sims having expressed concerns that the market is already very concentrated among a few major players. The deal on Milemaker, a Caltex franchisee, is one of the smaller acquisitions targeted by Caltex after being beaten by BP for the Woolworths network on price. Independent sellers play a vital role in tempering fuel prices as they are typically slower to increase prices and quicker to bring them down. The ACCC has invited parties to respond to the issues with a final decision to be announced on April 20. China is throwing its policy toolbox wide open in an all-out effort to sustain leadership in electric vehicles and to make sure that Chinese companies win a dominant share of future EV sales. The City of Beijing announced plans this month to transform its entire taxi fleet to electric propulsion. Within 5 years, electric cars and SUVs will replace the 70,000 gasoline and diesel-fueled taxis now cruising the streets of the capital. Beijing is not the first city to mandate electric taxis. Shenzhen, the booming tech city of 10.8 million across the border from Hong Kong, declared that all new taxis entering the fleet will be electric. The changeover starts this year. China is already the world’s leading electric vehicle market by a wide margin. In 2016, China EV sales reached 507,000 units, more than double the level in Europe (221,000) and almost four times the US number (157,000). China EV sales are expected to climb to 700,000 this year, according to the China Association of Automotive Manufacturers. China is making success in electric vehicles a national priority for three reasons: to reduce dependence on foreign oil, to improve air quality and to take leadership in a key emerging technology. Saudi Aramco to invest nearly $7 Billion in Malaysia Saudi oil giant Aramco will buy an equity stake in Malaysian firm Petronas’ major refining and petrochemical project, the companies announced this month, pumping in $7 billion in its biggest downstream investment outside the kingdom. The deal will boost Aramco’s downstream business ahead of a planned initial public offering next year and also bolsters Malaysia’s state-controlled Petroliam Nasional Bhd - known as Petronas - after it cut spending because of the slump in oil prices. In a joint statement, the firms said Aramco will take a 50 percent stake in select ventures and assets in the Refinery and Petrochemical Integrated Development (RAPID) project developed by Petronas. The deal signing was witnessed by Malaysian Prime Minister Najib Razak and Saudi King Salman on a state visit to Malaysia - the first in over a decade.“Malaysia offers tremendous growth opportunities and today’s agreement further strengthens Saudi Aramco’s position as the leading supplier of petroleum feedstock to Malaysia and Southeast Asia,” Aramco will supply up to 70 percent of the crude feedstock requirement of the refinery, with natural gas, power and other utilities to be supplied by Petronas. Mozambique to get $350m in taxes from Eni-Exxon deal Mozambique will get $350 million in capital gains tax from Eni after the Italian oil and gas company agreed to sell a stake in a gas field to Exxon Mobil Corp, a senior tax official said this month. Exxon, the world’s biggest publicly traded oil producer, agreed earlier this month to pay Eni $2.8 billion for a 25% stake in a Mozambican gas field. Eni is currently the operator of Mozambique’s Area 4 licence which is one of the world’s largest gas discoveries in recent years. The deal offers Mozambique the chance to transform itself from one of the world’s poorest countries into a global LNG exporter. Zera to deal with unlicensed fuel dealers in Zimbabwe The Zimbabwe Energy Regulatory Authority is crafting Petroleum Liquid Fuel Licensing and Compliance Regulations that will deal with illegal fuel vendors that operate in Mutare and surrounding areas, Energy deputy minister Tsitsi Muzenda said in 2016 a total of 14 unlicensed fuel dealers were closed and 24 illegal fuel dealers set for prosecution.“ Zera conducted a fuel retail inspection and noticed an increase in illegal fuel deals in Mutare and areas in proximity with the town, down into Mozambique, where relatively cheaper fuel is brought into Zimbabwe,” Muzenda said. “To curb the illegal activities, Zera, working with the Zimbabwe Republic Police (ZRP), carried out routine inspections which showed 35% of fuel retail sites were unlicensed and were operating from former commercial industrial sites with no clearance from Mutare City Council, Fire Brigade or Zera, and these were manned by untrained people,” she said. Muzenda said even after some of the illegal fuel dealers were arrested, the illicit practices worsened with the dealers temporarily deserting their sites only to return later. Muzenda said the Petroleum Liquid Fuel Licensing and Compliance Regulations, once crafted, would propose stiffer penalties for offenders.“Zera will prosecute for all fuel that is unmarked or which is marked with a diluted marker because it will be illegal fuel and those caught will be referred to Zimra for assessment and made to pay duty for the fuel. 8 erpecnews is published by McLean Events, Conferences and Media Ltd.


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