Low cost petrol stations' expansion south to Wellington welcomed by transport industry

The plan for low-cost operators to enter Wellington's fuel market has been welcomed by the transport industry.

Family-owned Waitomo Group followed Gull with announcements both companies are moving south.

AA principal advisor Mark Stockdale said it's a positive move for motorists, with petrol stations owned by major companies in the vicinity of where the low-cost businesses set up likely to lower their prices to remain competitive.

Road Transport Forum New Zealand’s Ken Shirley also welcomed Waitomo and Gull’s expansion.

"The price will drop overnight once we get this sharper pencil, better competition coming in," he said.

"Some of these smaller, local firms have much lower overheads, they don’t have the same management structure some of the large oil companies have."

Mr Shirley said the impact of their existence in Auckland is clear, where prices can be lower than Wellington and Christchurch, despite a regional fuel tax.  

The Waitomo petrol stop will be built on Hutt Road in central Wellington, after receiving consent this week, managing director Jimmy Ormsby said.

"We’re in expansion mode and we’re excited about disrupting the market and well, competing…bring it on," he said.

"We've got a pretty low-cost model, the pumps will all be unmanned, it will be a pay at pump scenario."

The company buys fuel wholesale from Mobil and sells it around the North Island.

A terminal in Lower Hutt will supply petrol for its new site.

A spokesperson for Gull said the company is days away from signing off a deal for land in Kapiti for its first petrol stop in the wider region, with negotiations on other sites in Wellington continuing.

He said while current market conditions have provided an improved outlook for the move, the company is taking a long-term view on the profitability of moving south.

The spokesperson said at the moment the plan is for fuel to be transported more than 500 kilometres from its Mount Maunganui terminal but it is hoping to secure terminal access in the region for better value for money.

Both companies have also signalled interest in opening petrol stops in the South Island.

A spokesperson for major petrol company Z said the business is seeing an increase in independent companies entering the South Island fuel market with different business models, services and prices.

There are around 1200 petrol stops or petrol stations currently in New Zealand, owned by Allied Petroleum, BP, Caltex, Challenge, GAS, Gull, Mobil, Nelson Petroleum, RD Petroleum, Waitomo Petroleum, Z-Energy, McKeown Group, Petroleum Logistics and Southfuels.

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1 NEWS reporter Kate Nicol-Williams looks into whether the newcomers can deliver. Source: 1 NEWS