Experts call for independent auditing to clarify petroleum prices

The newly elected Minister of Finance, Vuong Dinh Hue has stated that one of the important tasks that he will do during his term is to make the petroleum prices; but how? Independent auditing would be the best solution.

The oil price in the world market has been decreasing sharply over the last many days, but people cannot understand why petroleum distributors still have not thought of lowering the retail prices.

High ranking executives of Petrolimex, the distributor which is holding 60 percent of the market share, then have appeared on local newspapers, saying that though the international prices have been decreasing, petroleum distributors are still incurring losses, which makes it impossible to ease the retail prices.

The Ministry of Industry and Trade has confirmed the loss of Petrolimex, saying that distributors now can earn a little profit with petrol sale, while they are still incurring loss with other products. The ministry has also affirmed that it is now still not the right time to lower the petroleum prices.

However, the confirmation of the state management agency still cannot calm the public down. The problem is that Petrolimex, in a preparation for its IPO (initial public offering) plan, has released a finance report which says that it has been making fat profits since 2008.

In 2008, the corporation’s profit was 913 billion dong, while the figure rose to 2880 billion dong in 2009. Though 2010 was considered a year of full of difficulties, Petrolimex still earned 81 billion dong in profit.

The big petroleum importer and distributor have predicted the profit of 1600 billion dong in 2011 and 2100 billion dong in 2012.

In fact, profit is the top priority for every business. Petrolimex which is holding a huge capital of 10 trillion dong in state’s capital also needs to strive for the optimum profit. Therefore, the expected profits of 1600 billion dong in 2011 and 2000 billion dong in 2012 are not the big profits at all, if comparing with the corporation’s chartered capital.

Especially, experts have pointed out that if Petrolimex can do business well, it will surely still make profits when the world’s oil price climbs to 85 dollars per barrel. Therefore, the experts believe that there exist problems in Petrolimex’s business strategy.

According to the consultants to the IPO plan, Petrolimex kept a big foreign currency loan worth hundreds of millions of dollars. Especially, Petrolimex got Vietnam dong from petroleum distribution, but it did not buy dollars immediately, but still kept Vietnam dong. As a result, Petrolimex incurred a big loss when the State Bank of Vietnam adjusted the dong/dollar exchange rate.

Experts believe that with the wrong moves, Petrolimex has incurred the loss of up to hundreds of billions of dong.

Meanwhile, though being a big distributor in the market, Petrolimex still has not modernized its distribution network, which explains why the sale costs remain very high. Of the 7 trillion dong worth of gross profit in 2010, 5 trillion dong was spent on sale expenses, which meant the actual profit was two trillion dong only.

People have got exceedingly amazed when reading the finance report released by Petrolimex. They have realized that while they have to pay high for petrol in the context of high inflation, Petrolimex still keeps making fat profits.

Meanwhile, ministries have argued that Petrolimex and other distributors now have to sell products at the prices lower than the cost prices, and that the petrol price in Vietnam is the lowest in the region.

In order to find out the truth, experts say, petroleum distributors need to be audited by independent auditing firms. They stress that it will take 3 weeks to clarify the issue.

Finance Minister Truong Dinh Hue has also promised that he will work out with relevant ministries and the State Audit to clarify the costs and the profits of companies, stressing that this will be a priority task for him when taking the office. – Vietnamnet

Tags: Vietnam petrol, Vietnam Petrol prices