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TAIPEI: Taiwan's premier unexpectedly announced Tuesday fuel price hikes of up to 16 percent by the island's key state-owned petrol firm to combat hoarders, as Asia grapples with soaring crude prices.
Premier Liu Chao-shiuan said state-run CPC Corp., which supplies most of Taiwan's petrol, would raise unleaded gasoline prices by 13 percent and diesel by 16 percent from Wednesday, ahead of expectations of hikes in early June.
"The price hike will become effective from Wednesday in order to ease the widespread mentality caused by an expected upward price adjustment," Liu told reporters.
Motorists have been queuing up at CPC gas stations, some clutching plastic containers to buy even more fuel, after Taiwan's new government last week said it would scrap a freeze on gasoline prices from June 2.
The price of unleaded gasoline will rise to 33.9 Taiwan dollars (1.11 US) per litre from 30 Taiwan dollars. The price of diesel fuel jumps to 31.9 Taiwan dollars per litre from 27.5 Taiwan dollars.
The move comes as some Asian governments struggle to afford energy subsidies or fuel price caps following a record-breaking surge in crude oil prices, which last week touched an all-time high above 135 US dollars per barrel.
Liu said gasoline prices could be raised again in July as the fuel price hike announced Tuesday covered only 60 percent of the recent increase in crude prices.
He said the government would in effect absorb 20 percent of the crude price increase by cutting its tax on petroleum products, while CPC would absorb the remaining 20 percent, in order to alleviate the domestic inflationary pressure.
Taiwan's consumer price index (CPI) in April rose 3.86 percent largely on increasing food prices.
Crude prices had surged 43 percent from October 2007 until May 20 this year, he said.
The government previously said it would provide 12.5 billion Taiwan dollars in subsidies for certain sectors after fuel price hikes, such as for taxi drivers and mass transport companies.
The government also decided to hike electricity prices in July to reflect the sharp rise caused by international energy prices.
Taiwan's price hike came after Jakarta raised the subsidised gasoline price by 33.3 percent to about 6,000 rupiah (65 US cents) a litre on Saturday despite widespread opposition ahead of general elections in April.
The problem of oil prices is particularly acute for India as it imports 70 percent of its crude needs. Rising oil prices, coupled with the global credit crunch have sent the Indian rupee into a tailspin and hit economic growth.
Malaysia also appears to be changing its stance on subsidies -- approaching 15 billion US dollars, or a massive seven percent of GDP -- despite setbacks to the government in March elections.
Kuala Lumpur is now reportedly considering a two-tier pricing system to make the rich pay more and cap the subsidy bill at more acceptable levels.
China, whose insatiable appetite for oil is helping to drive crude prices higher, has made it clear fuel costs will remain well below market rates even as its energy needs surge ahead of the Olympics.
China increased retail fuel prices by around 10 percent late last year but the government continues to throw billions of dollars in subsidies at state-owned oil and gas company Sinopec. - AFP/ac
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