SINGAPORE – Long queues snaked around Cnergy petrol stations across Singapore this week, as motorists flocked to take advantage of prices significantly lower than those offered by major competitors, even as global oil shocks push pump prices past S$3 per litre. Shares of Union Gas Holdings, Cnergy’s parent company, surged by as much as 40% over the past week, fueled by the unexpected surge in demand.
At Cnergy’s Dunman Road station on Wednesday, 95-octane petrol was selling for S$2.41 per litre, compared to S$3.47 at Shell, according to reports. The price difference, coupled with rising costs at other stations, has created localized traffic congestion and drawn attention from social media users.
Union Gas CEO Teo Hark Piang described the pricing strategy as a calculated move to gain market share, acknowledging that the company is currently operating on “very, very marginal profit… Notice days that we really go without profits.” He characterized the difference between wholesale costs and pump prices as a “marketing expenditure,” telling The Business Times that the company is focused on managing overheads to pass savings on to consumers “so long as the business doesn’t lose money.”
The aggressive pricing, however, is not without its challenges. Teo admitted that the high volume of customers has created “operational bottlenecks” at the company’s three stations, located in Queensway, Dunman Road and Vintage Toh Tuck Road. He stated that staff have been deployed to manage traffic flow, which has at times blocked bus lanes.
The unexpected popularity of Cnergy’s petrol stations is also temporarily hindering the company’s plans to expand its electric vehicle (EV) charging infrastructure. “EV (drivers) don’t want to be in the queue to approach and charge,” Teo said, noting that the chargers are currently underutilized. He also revealed plans to advise tenants to delay opening planned snack bars at the Dunman Road and Queensway locations to mitigate further congestion.
Despite the operational hurdles, analysts suggest the strategy is proving effective. Professor Lawrence Loh of the National University of Singapore (NUS) Business School called the queues an “effective publicity stunt” that has boosted Union Gas’ brand equity. “Being a new player against a competitive field of energy retail giants, its offer of knock-down prices is the surest way to gain consumer attention,” he said, adding that investors are anticipating long-term gains despite short-term margin compression. He described the situation as “no pain, no gain.”
Teo Hark Piang cautioned that Cnergy cannot maintain its current prices indefinitely, stating that adjustments will be necessary based on future wholesale costs. “If the next shipment is expensive, then we’ll move up a little bit,” he said, but stressed the company will “try (its) best to maintain the same distance” in price from other industry players. Union Gas currently derives approximately 22% of its revenue from the commercial sale and distribution of petrol and diesel.
The company is not employing hedging strategies to mitigate the impact of rising oil prices, instead opting to absorb the costs directly. Union Gas buys diesel and imported natural gas for its Cnergy stations, and has already raised pump prices four times since the start of the conflict in Iran on February 28, according to Teo.
