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Wednesday, June 12, 2024

Petrolimex worries about partial short supply, cost overruns

The Saigon Times

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HCMC – The Vietnam National Petroleum Group (Petrolimex) has written to the Ministries of Industry-Trade and Finance over the risk of a partial petrol shortage and proposed the authorities make a due cost adjustment to compensate overruns.

The global oil market volatility and the surge in domestic consumption have put pressure on fuel trading businesses as inventories are running thin quickly.

The company’s daily fuel sales average 17,000 cubic meters, but it has recently increased to above 21,000 meters. The amount even hit 27,000 cubic meters on August 31, up 60% compared to normal days.

According to Petrolimex, a partial fuel shortage likely occurs due to the lack of efficient coordination in inventory management and transportation, especially in remote areas.

The cost of transport and factors included in the base price have not been calculated sufficiently since the July 11 price review and have brought about financial difficulties for the primary wholesalers in paying commissions to retailers. Cost overruns have led to huge losses for the primary petrol wholesalers including Petrolimex.

The above explains why the primary wholesale enterprises had to pay a zero commission to retail stations recently, causing the petrol retail stations to suspend their business due to losses and call for help in the past few days.

To avoid the partial disruption of supply, Petrolimex proposed the ministries make a due adjustment of the cost of transport, including international shipping, in the upcoming price review on September 12 to ease hardships for the wholesalers.

The authorities should accelerate an inspection into the responsibilities of these primary traders and distributors in ensuring the petrol supply and satisfying the sale demand of the distribution system, according to Petrolimex, an enterprise that currently holds a share of 49% of the domestic petrol market.

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