Source: Radio New Zealand
The proposal is subject to Commerce Commission approval. RNZ / Dan Cook
The Automobile Association believes a proposed merger between two fuel companies should drive down pump prices.
NPD and Gull want to combine sites, teams and supply chains to form what they say would be the largest independent, majority New Zealand-owned fuel company.
The proposal is subject to Commerce Commission approval.
The South Island-based Sheridan family would own half of the new company, with Barry Sheridan – current NPD owner and chief executive – to become the head of the new company.
Australasian private equity firm Allegro Funds, which owns Gull, would hold the other half.
In a joint statement, NPD and Gull said each of their combined 240 sites would retain their distinctive brand.
AA principal policy advisor Terry Collins said both companies had a low-cost business model.
“What that means is that the savings are passed onto customers. When Gull first arrived with that model in New Zealand it became known as the Gull effect because it dropped the prices and competitors had to match it,” he said.
“Now you’ve got two strong companies with a similar model seeking to merge their business and utilise their assets a lot more efficiently. If they do that, then we’ll obviously see lower prices as they pass them on, but how much savings they can make and pass on is yet to be seen.”
Collins believed merging would be a smart business move for both companies.
An NPD petrol station Supplied/ NPD
“Basically it secures their supply for the company, and it also has the synergy of their own terminal in Mount Maunganui that Gull had and all the freight and trucking logistics in the South Island that NPD did,” he said.
“Gull was owned by an investment company out of Australia and NPD is a family-owned operator, so they’ve got two sharp kind of management teams together who have known their business for a long time.”
Collins noted that over this holiday period, generally all the oil companies seemed to be making excessive margins.
“We’ve been tracking the price of fuel for the last couple of months and we’re watching as the international landed prices dropped, the retail prices haven’t dropped at the same level,” he said.
“I think what they need to be doing is drop some of those prices more. Fuel in the first quarter of next year should be much cheaper unless something major geopolitically happens.
“The price of oil has been below US$60 at some stages and we want to see those savings passed on to our motorists.”
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
