Petrolimex complains of losses due to unclear guidelines
Despite a fall in the price of crude oil, unclear guidelines for petroleum trading has prevented traders from cutting prices in June, said a Petrolimex official.
No price cut but more loss?
Petrolimex still incurred losses, even though they did not decrease prices in June, Huyen said.
According to Huyen, wholesalers would have been able to lower domestic prices by VND200-300 per litre, but they did not. The reason, according to Huyen, is that they did not receive any detailed guidance as to how they were supposed to cover their losses from the first quarter of the year, a combined VND2 trillion (USD97 million).
Although the Ministry of Finance issued a document saying that it would help cover these losses there were no details about how the issue would be handled. As a result, traders say they may have to set aside profits to cover past losses.
By the end of July the petroleum stabilisation fund had collected VND102 billion (USD4.94 million), she said.
An anonymous official of the petroleum price regulation group admitted that, “Detailed guidelines should be issued to all enterprises to help them deal with losses resulting from joining the price stabilisation programme."
Nguyen Tien Thoa, Director of the Ministry of Finance’s Price Management Department, said only, “I have not directly heard Huyen's complaint so I have no comment.”
After June oil prices were kept unchanged, Petrolimex continued to complain about losses.
“The price of imported gasoline has reached USD129 per barrel in recent days. As a result, traders are losing about VND600 per litre of regular gasoline, VND400 per litre of diesel and VND500 per litre on fuel oil," Huyen claimed.
Thoa confirmed that traders are losing money because, even though the price of crude oil has gone down, refined fuel prices continue to rise.
Traders losses become agents gain
Even though petroleum traders are taking losses, the commissions they pay to agents are increasing.
Dang Vinh Sang, General Director of Ho Chi Minh City's One-Member Limited Liability Petroleum Company Limited (Saigon Petro) said that agents have been pressurising traders to increase their commissions. It used to be that an agent would charge a commission of VND1,200 (0.06 US cents) per litre of petroleum. But they now fluctuate from between VND700-VND900 (0.03-0.04 US cents) per litre, depending on different firms.
These high commissions are eventually passed on to the consumer.
"Of course we would rather not pay such high commissions, but we have to compete with other traders," Sang noted.
Huyen attributed the high commissions to a lack of agents, saying that whenever a trader wants to lower its inventory agents will require an increase their commissions. Petrolimex can maintain lower commissions because it has more agents than other traders.
On the other hand, Dr. Nguyen Minh Phong from the Hanoi Institute of Economic and Social Development and Research said, “We cannot confirm whether petroleum traders are actually taking losses because of lax financial supervision and a lack of transparency in petroleum price calculation."
Petrolimex maintained prices in June
Dam Thi Huyen, Deputy General Director of the state-owned Vietnam National Petroleum Corp (Petrolimex) said, at the Ministry of Industry and Trade’s online meeting on August 1, that petrol traders were puzzled about how to deal with their losses from joining the Government’s petrol price stabilisation programme. They did not ‘dare’ to lower prices in June, despite the falling prices in the world market.No price cut but more loss?
Petrolimex still incurred losses, even though they did not decrease prices in June, Huyen said.
According to Huyen, wholesalers would have been able to lower domestic prices by VND200-300 per litre, but they did not. The reason, according to Huyen, is that they did not receive any detailed guidance as to how they were supposed to cover their losses from the first quarter of the year, a combined VND2 trillion (USD97 million).
Although the Ministry of Finance issued a document saying that it would help cover these losses there were no details about how the issue would be handled. As a result, traders say they may have to set aside profits to cover past losses.
By the end of July the petroleum stabilisation fund had collected VND102 billion (USD4.94 million), she said.
An anonymous official of the petroleum price regulation group admitted that, “Detailed guidelines should be issued to all enterprises to help them deal with losses resulting from joining the price stabilisation programme."
Nguyen Tien Thoa, Director of the Ministry of Finance’s Price Management Department, said only, “I have not directly heard Huyen's complaint so I have no comment.”
After June oil prices were kept unchanged, Petrolimex continued to complain about losses.
“The price of imported gasoline has reached USD129 per barrel in recent days. As a result, traders are losing about VND600 per litre of regular gasoline, VND400 per litre of diesel and VND500 per litre on fuel oil," Huyen claimed.
Thoa confirmed that traders are losing money because, even though the price of crude oil has gone down, refined fuel prices continue to rise.
Traders losses become agents gain
Even though petroleum traders are taking losses, the commissions they pay to agents are increasing.
Dang Vinh Sang, General Director of Ho Chi Minh City's One-Member Limited Liability Petroleum Company Limited (Saigon Petro) said that agents have been pressurising traders to increase their commissions. It used to be that an agent would charge a commission of VND1,200 (0.06 US cents) per litre of petroleum. But they now fluctuate from between VND700-VND900 (0.03-0.04 US cents) per litre, depending on different firms.
These high commissions are eventually passed on to the consumer.
"Of course we would rather not pay such high commissions, but we have to compete with other traders," Sang noted.
Huyen attributed the high commissions to a lack of agents, saying that whenever a trader wants to lower its inventory agents will require an increase their commissions. Petrolimex can maintain lower commissions because it has more agents than other traders.
On the other hand, Dr. Nguyen Minh Phong from the Hanoi Institute of Economic and Social Development and Research said, “We cannot confirm whether petroleum traders are actually taking losses because of lax financial supervision and a lack of transparency in petroleum price calculation."
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