Fuel cos protest cut in marketing margins

The companies say that they will recoup losses by reducing discounts.

Israel's fuel companies are protesting yesterday's decision by the Ministry of Finance and Ministry of National Infrastructures to cut the fuel companies' marketing margins by NIS 0.19 per liter. They cut the margin to reduce the price hike for gasoline, which came into affect at midnight yesterday.

In notices to the Tel Aviv Stock Exchange (TASE) today, Delek Israel Fuel Corporation Ltd. (TASE: DLKIS), Paz Oil Company Ltd. (TASE:PZOL), Dor Alon Energy in Israel (1988) Ltd. (TASE:DRAL) and Sonol Israel Ltd. owner Granite Hacarmel Investments Ltd. (TASE: GRNT) said that the reduction would negatively affect their financial results.

Paz said that it would seek to minimize the financial damage of the cut in the marketing margin by reducing its operating costs, consumer discounts, and rent on gas stations.

Delek Israel estimated that the cut will reduce its gross profit by NIS 80 million in 2011, without taking into account measures to counter the reduction. The company added that would take measures vis-à-vis customers, suppliers, and gas station owners, as well as other streamlining measures.

Delek Israel and Sonol yesterday petitioned the High Court of Justice against the mandated cut in the marketing margin. Sonol wants the government to explain its actions and is asking for a temporary injunction against the cut. Dor Alon said that it was considering a petition, and Paz said that it was examining its options.

The Ministry of National Infrastructures has been warning that an immediate NIS 0.19 per liter reduction the fuel companies marketing margins was liable to destabilize the large companies and could seriously harm the small companies. The Ministry of Finance dismisses the claim, saying that it’s a campaign of intimidation by the fuel companies that resembles the campaign by the oil and gas exploration companies against the Sheshinski committee, and campaigns by the mobile carriers and quarries against similar reductions - all of which proved groundless.

Published by Globes [online], Israel business news - www.globes-online.com - on September 1, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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