An oil importer's run-in with Tokyo rules

Defeated once, Taiji Sato, a Japanese independent oil importer, is pursuing his one-man rebellion against Tokyo's control over the domestic oil business. Mr. Sato ran afoul of Japan's powerful Ministry of International Trade and Industry (MITI) by trying to import 3,000 kiloliters (793,000 gallons) of cheap refined gasoline from Singapore last December. This ran counter to the Japanese government's longstanding policy of refining all gasoline domestically from imported crude.

Sato was also planning to offer the fuel to motorists at almost 10 cents a liter less than the 60 cents they now have to pay. (A liter is 1.06 quarts.) And to the 12 domestic refiners, protected from competition by MITI, that spelled the collapse of their business.

Tokyo newspapers have labeled Sato hangyakusha (rebel) for challenging the basic Japanese assumption that the individual should always submerge his interests to those of the group, especially when the ``national interest'' is involved.

If he succeeds, the argument goes, the floodgates are opened to foreign products priced at levels that local firms cannot hope to match because of their high production costs.

Sato ignored repeated high-level MITI warnings against importing the first 3,000-kiloliter shipment, which he bought from the Singapore Petroleum Company for $600,000. When the shipment reached the western Japanese port of Kobe in December, it was impounded by customs.

The bank that was lending him the money to buy the gasoline suddenly withdrew its support, allegedly under MITI pressure. That left Sato with no choice but to accept a purchase offer from Nippon Petroleum Company to cover his costs.

But late last month Sato returned to Singapore, vowing to continue his battle on behalf of 35,000 fellow independent retailers operating gasoline stations, as well as millions of Japanese motorists. Saying he had secured foreign bank support, he reached agreement in principle with Singapore Petroleum for another 3,000-kiloliter shipment.

Before leaving Tokyo, Sato expressed concern that the Japanese government would put pressure on Singapore to prevent further business dealings, but at the end of his negotiations the businessman said he had found no evidence of ``any political elements being involved.''

Sato's case has turned the spotlight on Japan's restrictive oil import laws at a time when some of its major suppliers like Saudi Arabia are stepping up sales of refined products. The Japanese government has denied, however, that it has acted against Sato simply to protect big domestic oil companies.

Hiroshi Matsumura, head of MITI's petroleum division, said in Tokyo that ``if Mr. Sato had been allowed to carry out his plan, it would have undermined Japan's policy of refining crude oil at home. . . . MITI acted to maintain the supply and price structure of other petroleum derivatives, the byproducts of petrol refined in Japan.''

If Sato had succeeded, MITI would have had no choice but to allow other businessmen to follow suit, which would have led the oil refineries to reduce their crude oil imports, leading to major disruption of the market, he contended.