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Petrol firms look to cut losses
Fuel dealers are saying that petrol prices should be raised by up to VND1,000 per litre to cover ongoing losses and to stabilise the market in the face of world price hikes.
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| Customers fill up at a petrol station in the capital. Domestic petrol retailers are making losses due to rising global prices. |
"World petrol prices continue to stay high, ranging from US$132 to $137 per barrel since February 25. For imported A92 gasoline, we're losing over VND1,000 per litre; for imported oil, we're suffering a smaller loss of VND800-900 per litre, but the situation is also very worrying," said Military Petroleum Corporation general director Vuong Dinh Dung.
Dung said companies were making losses, despite a 3 per cent cut in the import tariff on oil, petrol being exempted from import duty. The two commodities are also subsidised by VND780-1,610 per litre from the Government's stabilisation fund.
He said prices should be lifted by a level equal to the losses so that companies could break even.
Deputy Minister of Industry and Trade Nguyen Cam Tu told Vietnamnet online newspaper that petrol supplies were still assured in the short term but noted that they were unsecured.
He said that last year, only Petrolimex reached the minimum quota for importing petroleum while almost all other firms cut import volumes. He added that in 2011, the petrol marketers had to close their doors on one occasion - and nearly for a second time.
"International information suggests the situation will happen again," he said.
Tu warned the global petrol market hadn't showed any signs of easing, especially when heavier pressure was challenging the European Union market.
He said as the import tariff preferential and subsidies had reached their limits, policy-makers would have to raise prices if global conditions did not improve.
Tu said dealing with company losses was the key to stabilising the petrol market and treating defects relating to gasoline quality and retail cheating that has prevailed on the domestic market during the last few months.
He added that these shortcomings were a result of importers slashing commissions for retailers to cover their own losses.
Some local media commented that favourable development of the domestic consumer price index last month could be the basis for petrol companies to expect a Ministry of Finance move to increase petrol prices.
Deputy Minister of Industry and Trade Tran Tuan Anh said the ministry had allocated specific import quotas to key importers and urged them to make sure demand could be met this year.
Meanwhile, Thoi bao Kinh te Sai Gon (Sai Gon Economic Times) newspaper reported that there were signs of illegal petrol exports to Cambodia through southern border areas as the price of domestic petrol was significantly lower than that in Cambodia.
Several filling stations' owners in the South were also intending to sell their stations due to losses, the newspaper reported. Petrol prices were last adjusted on October 10 last year.
vietnamnews
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