Petroleum distributors can’t cut prices

Domestic petroleum distributors complain that they are still enduring losses, even though the world’s oil price has decreased significantly.

The crude oil price in the world market has dropped by 11 percent in the last days, which has prompted people to hope that petroleum prices will decrease.

At the closing bell, sweet light oil in New York on May 6 decreased further by $2.86 per barrel (or 3.6 percent from the previous trading session) to $77.11 per barrel.

This was the third consecutive trading session of sharp crude oil price falls, marking the heaviest price decrease in the last 15 months.

In London, Brent Sea Oil on May 6 also decreased by $3.08 per barrel to $79.53 per barrel. On May 7, the sweet light oil price in Asia continued decreasing, trading around $77 per barrel.

Vuong Thai Dung, Deputy General Director of the Vietnam Petroleum Import-Export Company (Petrolimex) told Thoi bao Kinh te Vietnam that the average A92 petrol price in the last 30 days is staying firmly at $91.82 per barrel, while diesel is steady at $96.08 per barrel, kerosene at $95.31, and mazut at $494.4 per ton

If counting other expenses like VAT and other kinds of fees, Petrolimex is incurring losses of 1400-1700 dong per every litre of oil and petrol sold. As for mazut, the corporation is losing 710 dong per kilogram.

On April 1, the Ministry of Finance allowed petroleum enterprises to use the petrol price stablisation fund to offset losses when selling at below cost prices. On April 21, the Government slashed the import tariff by 3-5 percent on petrol and diesel to ease the financial burden on petroleum importers and distributors.

Petroleum distributors say the measures still cannot help them escape their losses. Representative from Saigon Petro said that distributors can take 500 dong from the petroleum price stabilization fund for every litre of petrol sold and 400 dong from the fund for every litre of diesel. However, the ministry asks companies to contribute 300 dong for every litre of petrol to the fund. This means that, in fact, they get 200 dong for every litre of petrol and 100 dong for every litre of diesel to offset losses.

“The sums of money are too small compared with the losses that enterprises are incurring,” he added, noting that people should not hope to see price decreases.

Director of the Price Control Agency under the Ministry of Finance, Nguyen Tien Thoa, admitted that while the crude oil price has decreased sharply, prices of finished products have remained steady in the last 30 days. Thoa commented that price drops are not very likely in the days to come.

Thoi bao Kinh te Vietnam

Tags: Vietnam petrol, Vietnam Petrol prices, Vietnam Petroleum