Since January, the government has been waging an uphill battle to bring down the prices of retail petroleum products. Its efforts culminated earlier this month when the Ministry of Knowledge Economy announced a plan to convert 10 percent of Korea’s gas stations ― 1,300 outlets ― into discount gas stations by 2015.

The scheme is aimed at infusing competition in the domestic market, which the ministry thinks is being dominated by a cartel of four refiners ― SK Energy, GS-Caltex, S-Oil and Hyundai Oilbank.

These discount gas stations, ministry officials hope, would be able to pull down gas prices at the pump by up to 100 won per liter. To offer such a large price cut, the new stations will feature self-serve pumps and provide no promotional gifts.

More importantly, the scheme calls for purchasing gasoline from domestic refiners at a big discount ― up to 50 won per liter. For this, the ministry has arranged for the Korea National Oil Corp. and the National Agricultural Cooperative Federation to purchase large quantities from the refiners on behalf of the discount stations.

Under this plan, the KNOC and NACF recently invited tenders for gas supply. Of the four refiners, three made tenders on Wednesday. Hyundai Oilbank did not participate in the bidding process, saying the deal would not be profitable.

The bidding outcome dealt a blow to the ministry ― the prices quoted by the three refiners were all higher than it expected. As a result, it could not select a supplier. This made it unclear whether the discount gas stations would be able to open this year, as scheduled.

Ministry officials are optimistic that they will be able to choose a supplier in the second round of bidding, which is slated for later this month. They view the participation of the three refiners in the first round as reflecting their desire to win the deal.

Yet it is highly questionable if the refiners would be able and willing to give much of a discount. They have kept saying that their profit margin is razor thin ― 10 to 20 won per liter of gas at most. They earn most of their profits from lubricant sales and exports of other petroleum products.

The refiners may be exaggerating the low profitability of their domestic gasoline businesses. But it appears true that they would incur losses if forced to sell it at as much as 50 won less per liter. This suggests the ministry’s initial business plan was somewhat unrealistic.

There is another important reason the refiners cannot meet the ministry’s expectations. If they offer a discount to the KNOC and NACF, they will be discriminating against their affiliated gas stations, whom they supply at full price. This type of a dual price system cannot be sustained for long.

The ministry threatens to import gasoline from abroad if the domestic refiners refuse to provide gas at a discount. But this is easier said than done. It will be costly for the KNOC and NACF to store imported gas and transport it to the discount gas stations.

The ministry’s campaign to make fuel more affordable is laudable. But if it seeks to lower fuel prices by twisting the arms of refiners, as it did in April when the four refiners cut their delivery prices by 100 won per liter, it would disrupt the market. The ministry’s discount station plan has led critics to suggest that it would be able to attain its goal more easily by nationalizing the refineries and operating them itself.