Lack of storage blamed for gas hike

The State should offer incentives to businesses to encourage the building of large liquid petroleum gas (LPG) ware-houses to help stabilise gas prices, Dr Nguyen Si Thang, chairman of the Viet Nam Gas Association (VGA) said.

LPG is used as a cooking fuel for households, a material for the petrochemical industry and a clean fuel for vehicles.

The current gas price hike had become a financial burden for consumers, economists said.

The hike was due to gas warehouses failing nationwide to store enough LPG for domestic consumption.

Thang said Viet Nam had a total of 31 LPG warehouses with a capacity of 500-4,000 tonnes each. Four had a capacity of more than 3,000 tonnes each.

When the gas price is inexpensive, businesses are not able to import a large volume of LPG directly from the Middle East and Australia, and are forced to rebuy from regional countries, including China and Singapore.

In November, the power joint-stock company VinaBenny (joint-venture between PetroViet Nam Southern Gas Joint Stock Co and the Japan’s Marubeni Company) built Viet Nam’s biggest LPG warehouse with a capacity of 84,000 tonnes in Long An Province and a total investment of nearly US$250 billion.

Once completed, the warehouse is expected to contribute to reducing gas prices by importing a large volume of gas from the Middle East and Australia.

Gas price fluctuations are also heavily dependent on the world market. Currently, the domestic gas volume meets about 40 per cent of market demand.

The volume is supplied by Dinh Co gas processing plant and Dung Quat oil refinery.

The gas market suffers from illegal production, trading, extraction and transportation.

Excessive speculation also occurs among gas businesses, leading to higher prices, particularly when the imported gas does not arrive on time.

According to local market management departments, gas sold under false brandnames currently accounts for 30 per cent, causing losses of more than VND80 billion ($4 million) to the State budget.

It has also seriously affected consumers’ interests and health.

Viet Nam has 24 gas businesses that meet the standard provided by Decree No107 issued by the Government last year .

Together with strengthening warehouse construction, relevant agencies need to tighten management of gas businesses in the market to stabilise gas prices.

According to VGA, LPG consumption demand has increased sharply from 400,000 tonnes in 2000 to 1.2 million tonnes this year.

It is forecast to reach 1.5 million tonnes and 2 million tonnes by 2015 and 2020, respectively.

On November 1, the price of a 12-kg gas canister increased by VND25,000 to nearly VND300,000. The price is forecast to continue to increase next month. — VNS

According to Decree No107, gas businesses must have a business registration certificate that covers the registration of LPG export and/or import; own or co-own a wharf within the Vietnamese seaport system under a joint-venture or capital contribution contract, which has been built under planning and according to current technical regulation; or have entered into a contract for lease of a wharf for at least one year to receive LPG ships.

The businesses have storehouses for a total capacity of tanks of 3,000cu.m or more for storing imported LPG from ships or other vehicles.

They must also own at least 300,000 LPG bottles of all kinds (except mini-bottles). These LPG bottles must be compatible with trademarks and brands already registered with a competent functional agency under the law.

Tags: Vietnam gas, Vietnam Gas prices