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Dollar price increases cause big losses to petroleum importers
Petroleum importers and distributors now complain that they are incurring heavy losses due to the more expensive dollar and the increasing petroleum prices in the world market.
Cao Van Han, Director of Military Petroleum Corporation, said that his business is making a loss of 1600 dong for every litre of petrol sold. The dollar price has been increasing, making the import petrol products more expensive. The prices have been increasing significantly in the world market.
“We still have not totaled up the losses, but we are sure that if the situation does not improve, the more we sell, the bigger losses we will incur,” he said.
Dam Thi Huyen, Deputy General Director of the Vietnam Petroleum Import-Export Corporation (Petrolimex), which is now holding 60 percent of the petroleum retail market share, at the meeting with the leaders of the Ministry of Industry and Trade on November 8, also said that the corporation is incurring the loss of 800 billion dong due to the dong/dollar exchange rate fluctuations.
The problem is that while the dollar increases, thus making the cost prices of import products more expensive, the corporation cannot raise the retail prices.
Huyen said that though the world prices have been escalating in the world market, Vietnamese people seem to feel safe, because they think the petroleum price stabilization fund will help stabilize the market.
However, the problem is that the fund only exists on paper. Under the current regulations, when making profit, i.e. when the domestic sale prices are higher than the world prices, petroleum distributors will put money in the fund, and when enterprises make losses, i.e. when they have to sell products at the prices below the cost prices, they can use the money from the fund to compensate their losses.
However, according to Huyen, this is just a “virtual” fund, because enterprises, which have been incurring losses for a long time, could ot put money into the fund.
Cao Van Han also said that the petroleum price stabilization only exist on paper, due to the prolonged losses. “If the prices in the world market continue to rise, the losses will be larger, while we will not be able to rely on the fund as we were told,” he said.
Petroleum distributors have stressed that the continued losses will seriously affect their businesses.
Huyen has called on the Ministry of Finance to take necessary measures to assist the enterprises, suggesting a lowering of the import tariff. “In the first 10 months of 2010, the total tax Petrolimex paid to the state budget was equal to the sum of tax it paid in 2009. This is the figure the management agency should consider,” Huyen said.
As for the Military Petroleum Corporation, its leaders also said that the sum of tax it has paid so far this year is equal to the tax sum it paid for the whole year 2009. They agree that it is necessary to slash the import tax now to help enterprises survive the difficult period.
Other distributors said that only Petrolimex, the biggest importer and distributor, can overcome current difficulties because it runs many other kinds of businesses. Meanwhile, they rely only on petroleum product trading, and they will not be able to bear losses for a long time.
Huyen said that on October 20 and 21, Petrolimex sent two urgent reports to the Ministry of Finance about the petroleum prices and the difficulties Petrolimex is facing, but there has been no reply.
vietnamnet
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