Independents eyeing Challenge petrol chain

By FIONA ROTHERHAM

Challenge's independent service station owners will bid for the company if it is put up for sale in order to keep petrol sales competitive.

Dutch-owned Shell said in its Commerce Commission application that the Challenge chain was among several assets it would divest if successful in buying Fletcher Challenge Energy.

Independent Dealer Group chairman John Gibson said around 60 of Challenge's independent owners were eager to buy the chain rather than see it disappear as they had already invested a lot of their own money.

"It is in our interests to keep Challenge staying there. There is no reason we couldn't put it out as a public float. There are a lot of possibilities, it is not a dead duck."

Challenge has around 5 per cent of the retail market, with 98 outlets nationwide. Only 17 of these are owned by the company with the rest held by independent owners.

When Challenge entered the market in April 1998 petrol prices dropped 5c a litre. Mr Gibson said its presence had also stopped a trend in recent years for the major oil companies to close many independent rural service stations.

"The ultimate result would have been for 100 per cent of rural service stations to disappear and that is not in the interests of the motoring public."

If put up for sale the chain could also attract a management buy-out or interest from the Australian independents Gull and Liberty.

Gull has faced the brunt of competition because of its smaller presence in New Zealand. Cut-price retailer Liberty backed away from entering the market after falling out with its NZ partners and as profit margins were squeezed by competition and increasing crude oil prices.

BP and Mobil would not comment on whether they would be keen on buying the chain while Caltex said it was not interested.

Oliver Mander, pricing manager for BP, said it was unlikely there would be dominance problems in terms of the Commerce Act if any of the big four oil companies were interested.