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Petroleum importers blame exchange rate for double loss
While the announcement that the petrol price will be kept unchanged in the immediate time has made people happy, petroleum companies complain.
The latest decision by the State Bank of Vietnam to devaluate the local currency by 9.3 percent has raised worries about price increases. The Government, in an effort to curb inflation, has reassured the public that it will not let the petroleum prices increase in the immediate time. However, the announcement has made petroleum distributors anxious.
A manager of Saigon Petro told VietNamNet’s Vietnam Economic Forum petroleum companies had been affected by the exchange rate fluctuations twice.
Petroleum importers pay their foreign partners 30 days after the import consignments arrive in Vietnam’s ports. This means that even though the exchange rate calculated initially for a litre of petrol was 19,500 dong per dollar,, enterprises have to pay their foreign partners at the increased exchange rate of 21,000 dong per dollar.
The manager said that this way enterprises incur the loss of 900 dong per litre of petrol sold.
Besides, petroleum enterprises cannot purchase dollars at reasonable time. When enterprises need dollars to pay their foreign partners, banks refuse to sell dollars to enterprises, but yet force them to borrow in dollars. After that, enterprises have to buy foreign currencies to pay their debts, and of course, they have to buy at higher prices,. 1200-1400 dong more for every dollar.
“When the dollar price was low, banks refused to sell dollars. They only accept to sell dollars now, when the dollar price has increased. As a result, Saigon Petrol has incurred the loss of up to 50 billion dong,” the manager said.
The manager went on to say that now Saigon Petro is still repaying the foreign currency loan it took to import petrol in October 2010. Now, with the official exchange rate having increased by 9.3 percent, the company would have to pay an additional 12 billion dong.
However, Saigon Petro’s loss is still much lower than that ofPetrolimex, the biggest petrol importer,. Vuong Thai Dung, Deputy General Director of Petrolimex, said his company owes up to hundreds of millions of dollars to both domestic banks and foreign partners. Now, with the dollar increase, the loss has grown by a trillion dong, a huge sum of money.
Prior to that, after two dollar adjustments in 2010, the total expenses of the company increased by 800 billion dong. The second exchange rate adjustment in August 2010 alone made the company’s expenses increase by 380 billion dong.
According to Dung, in 2010, Petrolimex sent tens of documents and urgent reports to the Prime Minister and ministries, asking the Prime Minister to instruct the State Bank to create favorable conditions for Petrolimex to purchase dollars so it can import petroleum products and satisfy the domestic demand. However, to no effect.
“Before the dollar price increased, we could not buy enough dollars, though we had much Vietnam dong. The volume of dollars we could purchase was in dribs and drabs,” he complained.
“Every year, Petrolimex needs about six billion dollars and every month, it needs 400-500 million dollars. However, we can purchase some tens of millions of dollars at maximum, while the remaining sum must borrowed,” he added.
The petroleum stabilization fund empty
However, the exchange rate adjustment isn’t biggest problem. “The biggest headache for us is that while the input price increases, we cannot raise the sale prices accordingly,” Dung said.
According to Dung, in the last six months, the company incurred the loss of 1000-1500 dong per litre in general, and 2500 dong per litre at maximum.
“The finished petrol price has soared in the world market, exceeding the 100 dollar per barrel threshold. and the dollar price has also increased sharply. However, we still cannot raise the retail prices,” he complained.
When asked why the enterprises do not ask for the help from the petroleum price stabilization fund, managers of petroleum enterprises answer that the fund has been empty for a long time.
Pham Huyen
vietnamnet
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