HDB fetches record price of $64 million for petrol station land plot

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By: 永久浪客/Forever Vagabond

A Singaporean in Australia wrote on his blog about Singapore refineries selling refined unleaded petrol to Australia at $0.45/L (A$ about the same as S$).

The author wrote (http://theindependent.sg/singapore-sells-australia-petrol-at-0-45l), “Singapore is the regional refining and distribution centre and among the world’s largest. Thus, the Singapore price of unleaded petrol (MOPS95 Petrol)) is the key petrol pricing benchmark for Australia.”

The author revealed that after including shipping costs, Australian taxes and retailer’s margin, unleaded petrol would be sold at $0.90 – $1.20/L for everyday consumers on the streets in Australia.

“So when retail petrol was going at $0.91 cents per litre in Perth last week, one cannot help wonder why Singapore consumers are paying closer to $2 per litre on Singapore streets when Australia is buying at only $0.45 per litre, including shipping cost,” the author lamented.

Govt taxes

Of course, in Singapore, the government does impose tax on petrol.

Last year at the budget session in Parliament, DPM Tharman announced a tariff hike on petrol. The tariff for premium grade petrol is set to $0.64/L, up by 20 cents, while the duty for intermediate-grade petrol – such as 92-octane and 95-octane – is $0.56/L, up by 15 cents.

His reasons are that petrol duties have remained unchanged since 2003 and he wants to “encourage less car usage and reduce carbon emissions”.

As a result, it was reported that overnight, retail price of 95-octane shot up to $2.04/L. Premium grade petrol price also skyrocketed to $2.20/L at SPC and $2.65 for Shell’s V-Power (prices are before discount).

The Australian government on the other hand, only imposes an excise tax of $0.38/L, according to the Singaporean in Australia.

HDB the biggest winner

So with just $0.18 more per litre ($0.56/L – $0.38/L) in excise duties that the Singaporean government is charging over what the Australian government charges, why is petrol retailing more than 2 times in Singapore than in Australia?

Thanks to a disclosure from a netizen, we now know that the culprit lies with the HDB’s tender system for land reserved for petrol stations. According to this HDB document found on the Net, this year 3 plots of land for petrol stations have been awarded to the following oil companies for a 30 year lease:

3700 Yishun Ring Road
Chevron (Caltex)
$42,700,000
Awarded on 3 Mar 2016

9 Tampines Avenue 2
Shell
$64,042,000
Awarded on 5 May 2016

10 Jurong West Avenue 1
ExxonMobil
$46,828,400
Awarded on 4 Jul 2016
hdb1 hdb2

In fact, the price bid of $64,042,000 by Shell is a record price for a petrol station plot. This does not even include construction cost. That means its land amortization cost per month is calculated to be $177,894 or about $6,000 per day (we have not even factored in manpower, utility and other costs).

So, everyday when this Shell station opens for business, it must recuperate $6,000 just to cover the land cost alone.As the old petrol station leases are up, the government would no doubt, be happy to put up the land for re-tender again at tens of millions of dollars per plot.

When Ngiam Tong Dow was the permanent secretary for finance, he recalled having a fight with then PM Lee Kuan Yew over the COE scheme.

Mr Ngiam would later recall during an interview, “I had a big fight with him (LKY) over this because the implementation of the COE scheme meant that we were taxing every man, woman and child in Singapore, from the day of his birth till the day of his death.”

“As COE taxes transportation, nobody can avoid it. You can avoid eating good durians, but you cannot avoid using transportation,” Mr Ngiam explained.

“He saw that I was right, but he was a charmer. Looking at me, he asked, ‘Ngiam, are you the Permanent Secretary of the Budget and Revenue Divisions at MOF?’ I said yes, to which he replied, ‘What’s wrong with collecting more money?'”

Indeed, what’s wrong with HDB collecting more money?