Interpellation on rigged oil price

The lawmakers took issue with the reported secret oil price deal among the domestic

refineries and their exorbitant profits from it, the National Defense Ministry`s purchase of jet oil with unreasonably high price, and collusive ties between the defense ministry and the refineries.

During the parliamentary interpellation of government ministers at the National Assembly plenary session on July 13, Rep. Cho Hui-Ok of the splinter United Liberal Democrats asserted that the defense ministry wasted some 130 billion won annually due to oil companies` undue profits and therefore spent the reserve because of bidding failure, adding that such a practice is tantamount to an "oil mafia" behavior.

Rep. Kwon also said that the oil refining companies sold oil to the National Police Agency and the Forestry Office with 15 won per liter higher than the international price. He stressed that reform is necessary in the direction of improvement of oil market and renovation of oil distribution system and its price structure.

Rep. Kwon Oh-Eul of the main opposition Grand National Party, said, in connection with the Defense Ministry`s undue oil purchase, that probes should be conducted to find

if there was a secret bargaining among the refineries and a collusion between the ministry and the oil firm.

Rep. Cho Seung-Joon of the ruling Millennium Democratic Party underlined that there is a need for the establishment of an oil market supervisory mechanism to be composed of the government, consumers` associations and enterprises, in order to prevent the refineries` wrongdoings arising from their monopolistic oil supply system.

Rep. Shin Yung-Kuk of the GNP , noting that the domestic oil firms are inflicting damage on the consumers through price rigging and dumping without exerting effort to lower prime cost, demanded the government to retrieve 2 trillion won of undue profits that the refineries had earned.

Prime Minister Lee Han-Dong, meanwhile, said in his replies to the lawmakers, said that irregular oil deals and the collusion between the Defense Ministry and the oil firms

will be brought to light through the ministry`s self-investigation and scrutiny by the Fair Trade Commission.

The prime minister went on to say that he will direct the ministries concerned to study the setup of a mechanism to prevent the oil companies` bad monopolistic practice and that the government is implementing an energy price structural reform program to establish a systematic oil price system and oil price globalization.

Industry-Resources Minister Kim Yong-Ho disclosed that his ministry entrusted the energy economy research institute to study the oil price monitoring system and oil market development plan, and the ministry is also studying an electronic commerce system to ensure transparency of the oil market.