At a glimpse, they are deep in the red, incurring losses
amounting to trillions of Vietnam dong in this year’s first half by selling oil
products at subsidized prices to lend a helping hand to the Government’s drive
to fight inflation and restore stability. It is just half of the truth,
however.
The Finance Ministry in a press
conference in Hanoi this Monday reviewed the performance of the State-owned oil
traders mandated by the Government to ensure fuel supply for the economy. The
meeting was held after outcries by the oil traders over huge losses they
incurred, seen as a precedent for their move to ask for a price hike. Figures
given at the press briefing, meanwhile, shed light on the real picture of State
monopoly in this sector, which is said to be not as dreary as lamented,
according to local media.
Petrolimex as the dominant oil
trader claimed to have lost over VND1.8 trillion, or nearly US$85 million, in
this year’s first half, attributing the loss to the subsidized price controlled
by the State. Other oil traders said they were in the same boat. Numerous
stories published in the local media, however, question the real nature of such
losses following the Finance Ministry’s figures, which pinpoint that the losses
were caused by ballooning operational costs.
As per the prevailing
regulation, the operational costs for all State-appointed oil traders shall not
exceed VND600 per liter or per kilo of fuels, including commissions for sales
agents and other business expenses. However, certain traders had announced the
costs as high as VND1,200, says Tuoi Tre, citing the ministry’s figures.
Citing experts and market
observers, the newspaper says Petrolimex, which holds a market share of some
55%, has incurred losses due to its fishy “transfer pricing.”
Sometimes, Petrolimex offered a
commission of only VND200 a liter, but the amount at other times shot up to as
high as VND860 a liter. Tuoi Tre says oil prices were not lowered according to
the global price this year, as Petrolimex managed to raise the commission to
its agents and distributors, stripping consumers the right to enjoy lower
prices. Since Petrolimex holds controlling stakes in several distributors and
own thousands of agents and filling stations, profits at such second-tier
traders have surged, and part of the sums is later returned to the giant oil
trader.
Vuong Hong Ha, head of the
corporate finance department under the Finance Ministry, is quoted as saying in
the newspaper that by claiming huge losses, Petrolimex and other oil traders
can avoid taxes payable, while they still earn big bucks.
Le Hoang Hai, deputy director
of the corporate finance department, asserts that State-owned traders are
earning profits for all oil products, not to mention the approved profit of
VND300 for each liter of oil sold on the market. “Since oil traders always
complain about losses, the finance ministry wants the public to see the reality
whether they are profitable or not,” he notes.
Hai refuses to conclude whether
the oil traders have made use of any transfer pricing tricks, but says “there
are signs of transfer pricing” to remit profits for their distributors and
agents.
Vnexpress also mentions the
suspicion over the transfer pricing tricks at Petrolimex and other oil traders,
saying they have been earning good profit by comparing the import price and the
retailed price. The online newspaper in another angle even criticizes
Petrolimex for failing to focus on its core business, as the corporation has
invested some VND1.3 trillion in other spheres such as banking, insurance, real
estate and securities.
Similarly, Phap Luat quotes
Nguyen Anh Tuan, deputy head of the Price Management Department under the
finance ministry, as ascertaining that oil traders obtained a profit of VND780
per liter of petrol retailed. “The Finance Ministry bases its calculation on
customs figures to assert that Petrolimex earned a profit of VND780 per liter
of oil products it sold,” he comments.
Regarding the loss of VND1.8
trillion claimed by Petrolimex, Vietnamnet calls it a “theatrical play.” The
news website also refers to conflicting figures at Petrolimex unveiled by the
auditor as well as related State agencies to suspect the truth behind the
corporation’s business performance figures.
Audited financial statements
announced by the consulting firm Deloitte show that the oil trader earned a
hefty profit of over VND4.3 trillion between 2008 and 2010, including over VND3
trillion of profit from oil trading, according to Vietnamnet. Meanwhile, a
report given by the Minister of Industry and Trade at the National Assembly
last month showed that the company suffered losses from oil trading in the
given period.
In a sarcastic tone, Tuoi Tre
comments that all the oil traders prefer to have losses rather than profits,
and calls for transparency in oil trading by timely releasing information
regarding their business performance.
Behind claims of losses, there
are untold stories about the real oil trading business. Behind the scene, there
are suspicions over “false losses and real profits,” and possibly there are
also trade frauds. Minister of Finance Vuong Dinh Hue, in a meeting over oil
trading, bluntly says that “if necessary, I will unveil frauds in oil trading,”
according to Vietnamnet. The formal losses as claimed are just half of the
truth.
Son Nguyen - The Saigon Times
Daily
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