ASEAN Rhythm | Economy | Southeast Asia
In recent weeks, shortages have forced gas stations across the country to close or restrict sales.
Vietnam’s government yesterday asked its largest fuel trading companies to release their stocks onto the market amid dwindling supplies at gas stations in the country’s two largest agglomerations.
The shortage dates back several weeks, although it has begun to affect more in recent days. According to local media reports, gas stations in Ho Chi Minh City and the capital Hanoi and surrounding regions closed or limited sales this week, with retailers citing financial difficulties and limited domestic supplies.
“Petroleum products are an indispensable source of energy for the economy…and therefore major fuel trading companies must avoid supply disruptions,” Industry and Trade Minister Nguyen Hong Dien said. , in a statement that Reuters reported.
Yesterday, news outlet VnExpress reported that gas stations in Hanoi put up signs stating that they were “out of gas”, while 108 of 550 gas stations in Ho Chi Minh City, or nearly 20 percent of the total, reported inventory shortages. Some sales limited to a small quantity, while others only sold motorcycles.
There seem to be several reasons for the shortage, part of which is a simple mismatch between supply and demand. On October 31, Petrolimex, Vietnam’s largest fuel importer, issued a statement stating that “demand for oil in the region has increased amid a pandemic recovery, pushing demand to exceed supplies, resulting in shortages and higher prices.”
But the exact reasons for the supply shortage remain unclear. At the end of last week, Dien denied that Vietnam was facing general shortages and blamed the dry pumps on exchange rate fluctuations and the difficulties some fuel importers have faced in accessing credit from banks.
“The domestic fuel market has remained stable, with no shortages, while prices are comparatively lower than in other parts of the region,” he said. Dien added that the country had ample fuel reserves, totaling some 3 million cubic meters, enough to satisfy domestic demand until the end of November, and that the national refineries, which supply between 70 and 80 percent of the fuel needs of the country, were working. in capacity.
But several additional factors appear to be exacerbating the supply shortage. According to VnExpress, the Ho Chi Minh City Department of Industry and Commerce attributed the city’s shortcomings to the suspension of the main suppliers due to “tax debts and insufficient equipment”. For example, Nam Song Hau and Xuyen Viet Oil, two major southern exporters, were banned from importing fuel in the July-September quarter. Partly as a result, reported that gasoline imports that quarter fell 40 percent from the previous quarter, and that only 19 of the 33 suppliers imported gasoline.
As a result, unlike neighboring Laos, where recent fuel shortage have reflected the country’s plummeting currency and low foreign exchange reserves, the situation in Vietnam appears somewhat more stable. Assuming the necessary supply exists, as the minister said last week, it should not be a question of if, but when and how quickly the authorities can speed up their arrival on the market.