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Following is a question by the Hon Mrs Selina Chow and an oral reply by the Secretary for the Environment, Mr Edward Yau, in the Legislative Council today (May 21):
Question:
Since 2003, the Government has adopted new measures in respect of the tendering arrangements for petrol filling station (PFS) sites, which include putting up existing PFS sites for tender upon the expiry of their leases instead of having the tenancy renewed automatically, and putting up PFS sites for tender in batches, as well as allowing tenderers to submit a single bid for all the sites in a tender, with a view to facilitating new market players in acquiring a commercially viable number of sites to achieve economy of scale. In this connection, will the Government inform this Council:
(a) in the past three years, of the respective numbers of PFS sites which had been put up for tender in the market or resumed by the authorities for alternative planning upon the expiry of their original leases;
(b) of the average time gap between expiry of the original lease and commencement of a new one in respect of the PFS sites put up for tender referred to in (a); and
(c) whether the authorities have assessed the effectiveness of the above new tendering arrangements in enhancing competition in the local auto-fuel retail market?
Reply:
Madam President,
The best way to enhance the competition in auto-fuel retail market is to facilitate the entry of new operators of PFS. The Government has taken the following measures to facilitate the new market entrants:
(i) remove import licence and supply contract restrictions on bidders for PFS sites as it is a possible hurdle to entry;
(ii) re-tender all existing PFS sites upon expiry of their leases, instead of renewing the leases to the existing operators;
(iii) add a new land grant condition for new PFS or on re-tendering of existing PFS sites that the operator must set up price information boards so as to enhance price transparency; and
(iv) since June 2003, the Government has tendered the PFS sites in batches consisting of two to five sites per batch, depending on the land supply situation. The new tendering arrangement facilitates the new entrants in acquiring a critical mass of PFS to achieve economy of scale so as to have an effective competition in auto-fuel retail market.
In the last three financial years (i.e. 2005-06, 2006-07 and 2007-08), a total of 12 PFS sites have been put up for tender upon expiry of their leases. The average time gap between the expiry of the original lease and the commencement of a new one is about 10 weeks during which the tasks involved include analysing tender prices and arranging the payment of the remaining tender sum and the signing of the lease.
Since the introduction of the new tendering arrangements in June 2003, two new operators have obtained 21 out of the 30 PFS sites put up for tender and successfully entered the market. The share of the first three biggest operators in terms of the number of PFS has dropped from 93 per cent to 77 per cent. These figures have demonstrated that the new tendering arrangements have effectively enhanced the competition in auto-fuel retail market.
The Government appointed a consultant in 2005 to study the local auto-fuel retail market including the impact of the new tendering arrangements for the PFS sites on the competition situation in the auto-fuel retail market in Hong Kong. The study report was published in 2006. It showed that there were clear signs that Hong Kong auto-fuel retail market was becoming more competitive. It also indicated that the new tendering arrangements have facilitated the new operators to increase their scale of operation and enhance competition.
Ends/Wednesday, May 21, 2008
Issued at HKT 17:02
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