Local petrol importers are still haemorrhaging money despite the government’s introduction of a 0% import duty rate and the reduction of world crude oil prices.
To overcome this situation relevant bodies are being forced to review the retail price of petrol.
The Ministry of Trade (MoT) estimated that last month importers lost 489 dong per litre of unleaded petrol 92, 2,285 dong for diesel, 3,415 dong for kerosene and 1,159 dong per kilo of mazut due to an increase in the cost of crude oil byproducts.
State giant petrol importer, Petrolimex, provides the local market with 2 million tonnes of petrol annually, according to Bui Ngoc Bao, Petrolimex’s deputy general director. He estimated that a US$61 diesel barrel has an additional transport cost of between US$1.50 to US$2, which results in daily losses of several billions of d8ng for Petrolimex.
An importer, who did not wish to be identified, said the country’s retail price of petrol still remains much lower than that of neighbouring countries. A litre of unleaded petrol 92 would cost 10,300 dong in Cambodia, 13,787 dong, in Singapore and 13,634 dong in India while only reaching 8,000 dong in Vietnam.
With these low prices the petrol enterprises will continue to suffer ongoing losses even with the government imposed zero% import tax, the importers aid.
The petrol market reflects world crude oil prices said Nguyen Tien Thoa, deputy head of the Price Management Department, of the MoP.
Crude oil by-products should increase with increasing crude prices, however, there has been a strange trend in the world petrol market recently, crude oil reduced to US$49.70 per barrel but petrol still retained the high price of US$56-57 per barrel and US$61 per diesel barrel.
Thoa is confident that petrol companies are not making up their losses so relevant ministries need to work out new measures to tackle difficulties that the enterprises are experiencing.
However, Quach Duc Phap, head of MoF’s Tax Policy Department, has a different opinion. “Losses or profits should be decided by the business strategies of every enterprise, Phap said. Adding that in the past the government has subsidised the companies with billions of d8ng and adjusted import tax in accordance with the world market.
“Now the import tax stands at zero, so enterprises have no reason to ask for state support,” he said.
However, enterprises do not have the right to decide petrol prices like many other industries, but must rely on the government to set prices for them. The only area of business they can change to increase profits is expenses.
Phap emphasised that complicated development in the world energy market last year forced the government to regulate petrol import tax 13 times.
“The government could not continue its protection mechanism for enterprises, meanwhile our neighbours removed their subsidising policy,” he said.
As a result cross-border petrol smuggling’ has risen recently, and as the government continues to use import tax as a tool to regulate local petrol sales, this means that Vietnam is subsidising its neighbours petrol prices.
The MoF is planning to impose a new import tax on importers in the near future, which should stop the constant adjustment as the world market changes, said Pha p.
The MoT has decreed that gas enterprises need to make detailed reports en their business including gas output, infrastructure, distributor nets, gas prices and promotion policies.
The MoT will also require enterprises to propose their plans relating to investment policies, managing and distributing mechanism, and regulations on brand names.
Enterprises must submit their’ report to the ministry before May 15.