State urges petrol dealers: ‘buy local'

The Ministry of Industry and Trade has asked PetroVietnam and the Dung
Quat Oil Refinery to work directly with domestic petrol dealers,
particularly Petrol-imex, to reduce reliance on imports.

The Vietnam National Oil and Gas Group (PetroVietnam) and the refinery
must report preliminary plans for production, consumption and stock of
Dung Quat's products by Friday, the ministry said.

PetroVietnam and the refinery should also work out a detailed plan for
production in 2011, the ministry said. It also called on the firms to
boost consumption of the refinery's products, including petrol for
airplanes, on the domestic market as early as possible.

So
far, nine out of 11 petrol importers in Vietnam buy the refinery's
products. In the first nine months of this year, the refinery's petrol
and oil sold on the domestic market accounted for 35 percent of the
total volume sold.

The Vietnam National Petroleum
Corporation (Petrolimex), which has a 50 percent share of the domestic
petrol and oil market, consumed 28 percent of the refinery's total
output of petrol and oil.

However, domestic petrol
consumption is 10 percent lower than predictions for this year, while
production at the refinery was now exceeding the year's plan by 25
percent, Pham Dinh Thuc, PetroVietnam's general director, said.

In the fourth quarter of this year, the refinery is expected to produce
about 1.9 million tonnes of petrol, while domestic petrol distributors
such as PVOil, Petec and Petrolimex have registered to buy just 430,000
tonnes from the refinery.

As a result, stockpiles have reached 75,000 tonnes and are predicted to reach 727,000 tonnes by the end of the year.

Domestic importers should revise their signed contracts to import fuel and buy up the difference from Dung Quat, Thuc said./.

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State urges petrol dealers: ‘buy local'

HA NOI — The Ministry of Industry and Trade has asked PetroVietnam and the Dung Quat Oil Refinery to work directly with domestic petrol dealers, particularly Petrol-imex, to reduce reliance on imports.

Viet Nam National Oil and Gas Group (Petro-Vietnam) and the refinery must report preliminary plans for production, consumption and stock of Dung Quat's products by Friday, the ministry said.

PetroVietnam and the refinery should also work out a detailed plan for production in 2011, the ministry said. It also called on the firms to boost consumption of the refinery's products, including petrol for airplanes, on the domestic market as early as possible.

Nine out of 11

So far, nine out of 11 petrol importers in Viet Nam buy the refinery's products. In the first nine months of this year, the refinery's petrol and oil sold on the domestic market accounted for 35 per cent of the total volume sold.

Viet Nam National Petroleum Corporation (Petrol-imex), which has a 50 per cent share of the domestic petrol and oil market, consumed 28 per cent of the refinery's total output of petrol and oil.

However, domestic petrol consumption is 10 per cent lower than predictions for this year, while production at the refinery was now exceeding the year's plan by 25 per cent, Pham Dinh Thuc, PetroVietnam's general director, said.

Fourth quarter

In the fourth quarter of this year, the refinery is expected to produce about 1.9 million tonnes of petrol, while domestic petrol distributors such as PVOil, Petec and Petrolimex have registered to buy just 430,000 tonnes from the refinery.

As a result, stockpiles have reached 75,000 tonnes and are predicted to reach 727,000 tonnes by the end of the year.

Domestic importers should revise their signed contracts to import fuel and buy up the difference from Dung Quat, Thuc said. — VNS

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Petrol stockpiled as imports continue

Photo: Tuoi Tre

The quickest way to help lower stockpiles of refined petroleum products produced by the Dung Quat Oil Refinery would be to minimize petrol imports, PetroVietnam general director Pham Dinh Thuc said on Thursday.

Domestic petrol consumption has ended up 10 percent lower than predictions for this year, while production at the Dung Quat Oil Refinery was now exceeding the year's plan by 25 percent, Thuc said.

In the fourth quarter of this year, the refinery was expected to produce about 1.9 million tons of petrol, while domestic petrol distributors such as PVOil, Petec and Petrolimex have registered to buy only 430,000 tons from the refinery.

As a result, stockpiles have reached 75,000 tons and are predicted to mount to 727,000 tonnes by the end of the year.

Domestic importers could revise their signed contracts to import fuel and buy up the difference from Dung Quat, Thuc suggested.

However, Petrolimex deputy director Dam Thi Huyen said PetroVietnam should anticipate petrol consumption needs in light of import contracts already signed by domestic distributors, who would have to pay heavy damages if the breached the agreements.

Thuc suggested these importers might be able to re-export products to other buyers, even if they can't break their contracts.

The Dung Quat Oil Refinery faced difficulties during its first period of operation, and it had been expected to operate at only 80 percent of initial capacity this year. PetroVietnam has urged importers to prepare to receive locally-produced petrol in the near future.

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Petrol stockpiled as imports continue

The quickest way to help lower stockpiles of refined petroleum products
produced by the Dung Quat Oil Refinery would be to minimise petrol
imports, PetroVietnam general director Pham Dinh Thuc said on Oct. 7.

Domestic petrol consumption has ended up 10 percent lower than
predictions for this year, while production at the Dung Quat Oil
Refinery was now exceeding the year's plan by 25 percent, Thuc said.

In the fourth quarter of this year, the refinery was expected to
produce about 1.9 million tonnes of petrol, while domestic petrol
distributors such as PVOil, Petec and Petrolimex have registered to buy
only 430,000 tonnes from the refinery.

As a result, stockpiles have reached 75,000 tonnes and are predicted to mount to 727,000 tonnes by the end of the year.

Domestic importers could revise their signed contracts to import fuel
and buy up the difference from Dung Quat, Thuc suggested.

However, Petrolimex deputy director Dam Thi Huyen said PetroVietnam
should anticipate petrol consumption needs in light of import contracts
already signed by domestic distributors, who would have to pay heavy
damages if the breached the agreements.

Thuc suggested these importers might be able to re-export products to other buyers, even if they can't break their contracts.

The Dung Quat Oil Refinery faced difficulties during its first period
of operation, and it had been expected to operate at only 80 percent of
initial capacity this year. PetroVietnam has urged importers to prepare
to receive locally-produced petrol in the near future./.

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Poor fuel management costs millions

Poor fuel forecasting and lack of communication had caused Vietnam to spend valuable foreign currency on importing petrol while domestic petrol was in oversupply, the Ministry of Industry and Trade said this week.

It has also contributed to Vietnam National Petroleum Corporation (Petrolimex) losing US$41 million in exchange rates so far this year.

Deputy Minister Nguyen Cam Tu said only 9 out of 11 petrol enterprises had bought petrol produced by Dung Quat Oil Refinery this year, using only 30-40 percent of its production capacity.

Petrolimex, which accounted for 60 percent of the country's market share of petrol, had been expected to buy 28 percent of Dung Quat's output, but had only bought 19 percent.

Tu explained that the reason for the high imports was a shortfall last year when the new refinery had failed to reach its production target due to teething problems and as a result petrol traders had had to import petrol in order to ensure supply.

This year, traders had again signed contracts to import fuel, hedging against the same thing happening again at the refinery, but the plant had ironed out its problems.

Since August it had been producing to its design capacity, which was equal to 6.5 million tonnes a year, or 30 percent of the country's needs, exceeding its own yearly plan by 25 percent.

Thus while local production was up, local demand was down as domestic traders would suffer heavy losses if they cancelled their import contracts.

The differences in exchange rates had already caused Petrolimex a loss of VND800 billion ($41 million) since the beginning of the year.

To address the problem, PetroVietnam would plan and work with petrol traders to limit stockpiled petrol and restrict imports.

In the meantime, Petrolimex had targeted to double petrol consumption from the refinery in the next three months and six out of 11 petrol importers had sought to reduce their imports to 700,000cu. m.

To date, the plant had processed 4.98 million tonnes and sold 4.74 million tonnes; in particular 4,500 tonnes of aviation fuel Jet A1 fuel was sold to PB Singapore Petroleum Company.

The country had imported 7.84 million tonnes in the first nine months, or 67.6 percent of its forecast consumption for the year.

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Weak oversight leads to violations in essential sectors

Customers buy petrol at a station on Lang Street, Ha Noi's Dong Da District. A lack of strict management within the petrol and steel markets is said to be a primary cause for the violations taking place in these sectors. — VNA/VNS Photo Minh Dong

HA NOI — A lack of strict management on the petrol and steel markets is said to be a primary cause of the violations taking place in these sectors, according to the Government Inspectorate.

Prime Minister Nguyen Tan Dung has approved the Government Inspectorate's recommendations for State management of imports and exports to achieve stabilisation in the petrol and steel markets.

Speaking at a press conference in Ha Noi on Tuesday, deputy chief of the Government Inspectorate Nguyen Van San said that the Ministry of Industry and Trade (MOIT) had not closely co-ordinated with provincial People's Committees and industrial park management boards, leading to ineffective investment.

San said the ministry had been slow to withdraw automatic import licences. He added that these have contributed to a high inventory level of steel, which, in turn, has affected business operations and caused banks to retract capital.

The Government Inspectorate said the ministry has not accurately reported the amount of imported steel and their control over market stabilisation on steel products for the Viet Nam Steel Corporation is limited.

The report showed that in 2008 alone, the corporation's profits reduced by VND600 billion (US$30.7 million), while profits at the Thai Nguyen Steel Company dropped by more than VND200 billion ($10.2 million).

The Government Inspectorate attributes this to the fact that the ministry had not taken strict measures to prevent the situation—it did not establish an inspection team on steel production and business activities.

Violations

The inspectors said the ministry did not carry out an inspection of petrol businesses, and thus did not follow the Inspection Law's Decree 55 on petrol business inspection.

MOIT granted business registration licences to 11 import firms but did not punish businesses that imported less petroleum than the stipulated minimum import quota.

In the 2008-09 period, six businesses violated the regulations with the lowest rate at 46 per cent.

The Government Inspectorate also discovered that the Transport Construction Company and the Truong Son Construction Company exported over 121 tonnes of petrol to Cambodia without permission from the ministry in 2009. The lack of investigation and punishment has led to increasing fraud in the sector. The Market Watch Department uncovered over 14,000 cases in 38 provinces and settled over 2,600 violations.

Inspectors added that the co-ordination between MOIT and the General Customs Department in controlling petrol export activities had not been effective, leading to exports of 100,000 tonnes of petrol without reports to the ministry.

They also pointed out the ministry's shortcomings in monitoring the operations of the Dung Quat Oil Refinery, which has resulted in a lack of transparency in business and State budget's receipts.

MOIT was asked to review and evaluate distribution systems to map out a complete development plan for the import of construction steel.

Banks' wrongdoings

Ngo Van Khanh, director of the Government Inspection's general affairs inspection department said that in the third quarter of the year, Government inspectors checked the interest rate-subsidised lending of five commercial banks: Military Bank (MB), Viet Nam International Commercial Joint Stock Bank (VIB), Asia Commercial Bank (ACB), Sai Gon Thuong Tin Commercial Joint Stock Bank (Sacombank) and Technological and Commercial Joint Stock Bank (Techcombank).

All the five banks had violated Decision No 131/2009/QD-TTg regulating procedures for granting short-term loans, Khanh said.

The lending period was restricted to the second quarter of 2009, but some banks expanded the period and other banks lent to those who were unqualified to received the subsidy, Khanh said.

State Bank Governor Nguyen van Giau said that banks had to correct their faults by recalling loans provided to unqualified customers. Khanh said that the MB was reclaiming money from 22 wrong customers from the 26 to whom they lent. — VNS

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Poor fuel management costs millions

Poor fuel forecasting and lack of communication had caused Vietnam to
spend valuable foreign currency on importing petrol while domestic
petrol was in oversupply, the Ministry of Industry and Trade said this
week.

It has also contributed to Vietnam National
Petroleum Corporation (Petrolimex) losing 41 million USD in exchange
rates so far this year.

Deputy Minister Nguyen Cam Tu said
only 9 out of 11 petrol enterprises had bought petrol produced by Dung
Quat Oil Refinery this year, using only 30-40 percent of its production
capacity.

Petrolimex, which accounted for 60 percent of
the country's market share of petrol, had been expected to buy 28
percent of Dung Quat's output, but had only bought 19 percent.

Tu explained that the reason for the high imports was a shortfall last
year when the new refinery had failed to reach its production target due
to teething problems and as a result petrol traders had had to import
petrol in order to ensure supply.

This year, traders had
again signed contracts to import fuel, hedging against the same thing
happening again at the refinery, but the plant had ironed out its
problems.

Since August it had been producing to its design
capacity, which was equal to 6.5 million tonnes a year, or 30 percent
of the country's needs, exceeding its own yearly plan by 25 percent.

Thus while local production was up, local demand was down as domestic
traders would suffer heavy losses if they cancelled their import
contracts.

The differences in exchange rates had already
caused Petrolimex a loss of 800 billion VND (41 million USD) since the
beginning of the year.

To address the problem, PetroVietnam would plan and work with petrol traders to limit stockpiled petrol and restrict imports.

In the meantime, Petrolimex had targeted to double petrol consumption
from the refinery in the next three months and six out of 11 petrol
importers had sought to reduce their imports to 700,000cu. m.

To date, the plant had processed 4.98 million tonnes and sold 4.74
million tonnes; in particular 4,500 tonnes of aviation fuel Jet A1 fuel
was sold to PB Singapore Petroleum Company.

The country
had imported 7.84 million tonnes in the first nine months, or 67.6
percent of its forecast consumption for the year./.

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Poor fuel management costs millions

HA NOI — Poor fuel forecasting and lack of communication had caused Viet Nam to spend valuable foreign currency on importing petrol while domestic petrol was in oversupply, the Ministry of Industry and Trade said this week.

It has also contributed to Viet Nam National Petroleum Corporation (Petrolimex) losing US$41 million in exchange rates so far this year.

Deputy Minister Nguyen Cam Tu said only 9 out of 11 petrol enterprises had bought petrol produced by Dung Quat Oil Refinery this year, using only 30-40 per cent of its production capacity.

Petrolimex, which accounted for 60 per cent of the country's market share of petrol, had been expected to buy 28 per cent of Dung Quat's output, but had only bought 19 per cent.

Tu explained that the reason for the high imports was a shortfall last year when the new refinery had failed to reach its production target due to teething problems and as a result petrol traders had had to import petrol in order to ensure supply.

This year, traders had again signed contracts to import fuel, hedging against the same thing happening again at the refinery, but the plant had ironed out its problems.

Since August it had been producing to its design capacity, which was equal to 6.5 million tonnes a year, or 30 per cent of the country's needs, exceeding its own yearly plan by 25 per cent.

Thus while local production was up, local demand was down as domestic traders would suffer heavy losses if they cancelled their import contracts.

The differences in exchange rates had already caused Petrolimex a loss of VND800 billion (US$41 million) since the beginning of the year.

To address the problem, PetroVietnam would plan and work with petrol traders to limit stockpiled petrol and restrict imports.

In the meantime, Petrolimex had targeted to double petrol consumption from the refinery in the next three months and six out of 11 petrol importers had sought to reduce their imports to 700,000cu. m.

To date, the plant had processed 4.98 million tonnes and sold 4.74 million tonnes; in particular 4,500 tonnes of aviation fuel Jet A1 fuel was sold to PB Singapore Petroleum Company.

The country had imported 7.84 million tonnes in the first nine months, or 67.6 per cent of its forecast consumption for the year. — VNS

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Highway fund hits opposition

HA NOI — The use of petrol taxes as a funding source for the Ministry of Transport's proposed national road maintainance fund continues to stir controversy, even though the ministry's latest proposal does not call for additional taxes for the next five years.

While the estimated annual need for road maintenance totals VND5.1 trillion (US$261.5 million) for highways and VND6 trillion ($307.7 million) for local roads, current funding sources meet just half of the demand for highways and even less for local roads, according to Minister of Transport Ho Nghia Dung.

The latest ministry proposal includes two options which would aim to mobilise financial resources to better manage and maintain road systems nationwide.

The first option would propose the immediate establishment of the fund at central and provincial levels. The funding for the first five to ten years would be sourced from the State budget, tolls and current petrol taxes.

After ten years, which would see the eradication of all road toll stations, the fund would be sustained by higher petrol prices and vehicle registration fees.

Toll stations would be eliminated to reduce traffic jams, eliminate corruption and cut administrative costs, said Nguyen Van Quyen, deputy head of the Directorate for Roads of Viet Nam.

The collection of additional petrol taxes would offset VND200 billion ($10 million) in costs related to the operation of road toll stations, said Quyen.

The second option would eliminate petrol taxes as a source of funds for road maintenance, but the ministry would delay establishment of the fund for at least five more years.

Dung said that the ministry continued to receive public comments on the fund proposal and that the ministry was committed to an appropriate roadmap to ensure the proper functioning of the fund without negative social impacts.

The ministry initially began circulating its draft decree on the road maintenance fund back in April for ministry and industry comments.

The first draft proposed new petrol taxes, vehicle registration fees, and levies on high fuel-consuming vehicles, but the proposal of a new fuel tax of VND1,000 ($0.05) per litre of petrol and VND800 per litre of diesel fuel was met with fierce opposition.

"With taxes and fees already accounting for as much as 30-35 per cent of petrol prices in Viet Nam, adding road maintenance fees, then environmental fees and resources fee, etc., a litre of petrol would carry too many taxes and fees," said economist Ngo Tri Long.

"A vehicle in Viet Nam is already burdened with various fees that haven't been clearly justified," said Dr Pham Xuan Mai from the HCM City University of Technology. "Besides, few high-quality roads have been built and many others are in bad condition, causing breakdowns for vehicles."

Hoang Duc Hau from the Viet Nam Bridge and Road Association also opposed the road maintenance fund proposal, calling it unfeasible for remote and mountainous areas.

Either of the latest options proposed by the ministry would cost the State about VND1.1 trillion ($51.3 million) in buying up toll collection rights at six privately-operated road toll stations, admitted Quyen, noting that 29 road toll stations on highways and another 26 on other roads would be slated for closure.

It would cost the State another VND100 billion ($5 million) to repay the debts of investors in toll stations, he added, and the jobs of nearly 2,900 toll booth employees would be lost. — VNS

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Use of biofuels promoted for nation's motor vehicles

Bio-fuel, which emits 30 percent less carbon dioxide than other petrols,
should be more widely used in the country to protect the environment,
experts have said.

Petrol Vietnam Oil Corporation (PV Oil), which makes bio-fuel E5, said the petrol was harmless to vehicles.

Made from biomass, the fuel is a mixture of 95 percent of conventional non-lead gasoline and 5 percent ethanol.

Under a trial run by PV Oil, Da Nang Polytechnic University
and Toyota Ben Thanh, it was found that bio-gasoline E5 had no negative
effects on vehicle engines.

PV Oil also noted that
bio-fuel E5 could increase engine capacity by 3.3 percent compared with
other gasolines, without a change in consumption.

According to results obtained in research projects, bio-fuel E5 can be
used safely for most vehicles made after 1990 and has the same functions
as other kinds of petrols, according to Dr Nguyen Huu Luong of HCM
City Polytechnic University 's Chemistry Department.

Luong also said that not all bio-gasoline was good for the environment because it would depend on the way it was made.

Bio-fuel E5 produced by PV Oil has been on sale since the beginning of August at two gasoline stations in HCM City .

However, many residents lack information about the new petrol and were reluctant to use it.

Nguyen Thanh Nguyen, a seller at Gasoline Station 5 in Thu Duc
disitrict's Hiep Binh Chanh ward, said only one or two out of 10
customers wanted to buy bio-fuel. Every day, the station sells no more
than 100 litres.

He said customers bought bio-fuel because it was 500 VND per litre cheaper than other petrol.

Pham Long, Thu Duc district's Hiep Binh Chanh ward, said that he often used petrol A92 for his motorbike.

"I wouldn't dare use bio-fuel because I lack information about it."

It is estimated that 40 petrol stations will sell bio-fuel in HCM
City by the end of this year, and about 4,000 stations by 2012, of all
which are under PV Oil, Petec and others, said Ly Hong Duc, deputy
director of PV Oil.

Some organisations like PV Oil,
Polytechnic University 's Chemistry Department's Laboratory and the
Dong Xanh Company in Central Quang Nam province are conducting
research on producing bio-fuel with advanced technologies.

Tests show bio-fuel E5 has a higher octane rating than other
conventional gasoline, allowing for better fuel economy, engine and
environmental protection.

The Government has
identified the production of bio-fuel as a pivotal industry to ensure
energy security, reduce dependence on fossil fuels and protect the
environment./.

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