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Jet fuel supply monopoly remains in place, for now
The Civil Aviation Administration of Vietnam (CAAV) has received applications from two enterprises wanting to supply jet fuel. However, CAAV has not responded to the companies yet, since no licence will be granted until the market development programming is completed.
Three’s a crowd?
The two enterprises which have applied to join the air fuel market are Petrolimex Jet Fuel Joint Stock Company (PJF) and Tan Son Nhat Petrol Commercial Joint Stock Company (Tapetco).
Currently, Vinapco, under the national air flag carrier Vietnam Airline, remains the sole air fuel supplier.
Land area for depots and fuel tanks is not a problem for the enterprises. PJF has leased a land plot from a military unit, while Tapetco can easily get land, simply because it belongs to the Southern Port Corporation.
PJF meets all necessary material and technical facilities at Tan Son Nhat Airport, and would be ready to operate officially in September. The advantage of the enterprise is that it owns a modern import and distribution system which has been operating smoothly. PJF has been selling air fuel to Cambodia, some 2,000 tonnes per month.
However, a source told VietNamNet that in the immediate time, CAAV, in the programme to eliminate the monopoly in air fuel supply, would allow two suppliers only.
This means that one of the two will be refused, though both of them have invested adequately in material and technical facilities and are ready for operation.
CAAV said that it has to limit the number of new suppliers, since air fuel trading requires good infrastructure, while suppliers have to be well equipped enough to meet the strict requirements on storage and fire prevention. The process of eliminating the monopoly should be carried out step by step, it says, not all at once.
Meanwhile, Director of the Southern Port Authorities Tran Thuy Minh said that some other enterprises also want to become air fuel suppliers, including Military Petrochemical Joint Stock Company (MIPEC).
CAAV’s Head Lai Xuan Thanh told VietNamNet on August 17 that CAAV had reported the case to the Minister of Transport and got instructions from the minister. Thanh said that CAAV would announce its decision in a week or two.
Competitive market taking shape
In fact, Vietnam’s aviation market remains a fledgling one, and includes just a few air carriers, including Jetstar Pacific, Vietnam Air Service Company and Indochina Airlines, which joined the market in late 2008 and is now operating with only one aircraft.
In 2008, the total volume of JET A-1 fuel provided to airlines, including foreign airlines in Vietnam, was a little over 500,000 tonnes, just 1/8 or 1/10 of that provided in Singapore and Hong Kong. Of this volume, Vietnam Airlines consumed 70 percent, other airlines 10 percent, and foreign airlines 15-18.
According to Vinapco’s Director Tran Huu Phuc, fuel trading in Vietnam is risky. As airports are located far from seaports and the exploitation frequency is low, traders have to pay a lot for storage, labour; in addition, investment costs are high, as are losses during transport.
Meanwhile, roads in Vietnam are very bad and vehicles have to run very slowly. Big-tonnage vehicles are prohibited on some roads, which means even higher transportation costs and higher risks for fuel security and quality.
Phuc thinks that the enterprises which want to join the market will target Tan Son Nhat Airport and the 15-18 percent of total fuel volume provided to foreign airlines (some 90,000 tonnes per annum).
In recent news, Vinapco, the sole fuel supplier, recently had to make a move to retain loyal clients by lowering the fuel supply fee to Jetstar Pacific from $640 to $633 per tonne, the same level as applied to Vietnam Airlines (Vietnam Airlines has been enjoying a preferential price since Vinapco is a subsidiary of Vietnam Airlines). Analysts say that this is a move towards a competitive fuel market.
Ngoc Ha
vietnamnet
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