Petrol wholesalers put the squeeze on retailers

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Báo Dân Trí English - 32 month(s) ago 3 readings

Petrol wholesalers put the squeeze on retailers

Many petroleum stores in Thua Thien Hue Province halted operations last week because of the low commissions they receive from wholesalers.

Petrol station in Huong Thuy Township shut for several days

According to an investigation by DTiNews reporters on April 13, Huong Thuy Joint Stock Company’s petroleum store in Huong Thuy Township closed its doors, claiming to have run out of petrol. This has forced local residents to struggle to find other places to fuel their vehicles.

The same situation was recorded at many other petrol stores in the township.

Facing the same difficulties, petrol stores in Huong Dien District have stopped selling gasoline since last October.

Most of stores that have stopped selling have been supplied by PetroVietnam Oil Corp (PV Oil), while those who get their products from Vietnam National Petroleum Corp (Petrolimex) have largely continued.

The provincial Department of Industry and Trade, in coordination with local a local watchdog group, has been carrying an inspection of the petroleum trade in the province since early last week. Initial results seem to suggest that these filling stations simply find it unprofitable because of low commissions from wholesalers.

Le Viet Xe, General Director of Huong Thuy Joint Stock Company, sent a proposal to the department to ask for them to step in after the company took enormous losses due to the low commissions.

According to Xe, his company received a commission of VND237 per litre of gasoline, and VND285 per litre of oil products by the wholesalers of PV Oil, Petrolimex and Military Petroleum Company in Danang City in the first quarter of 2012.

The modest commissions did not cover business expenses. The firm claims to have lost VND450 million (USD21,562) during the quarter and VND2.2 billion (USD105,414) in 2011.

The company was seeking approval from the department to halt operation for a certain period. They have already cut pay to their staff from VND3 million (USD143.74) to VND1 million (USD47.91) per month.

Unfair policies

Pham Truong Uyen Phuong, Deputy General Director of Huong Thuy Company said, “We have no choice but to close our stores. 70% of our petroleum comes from PV Oil, while the rest comes from Petrolimex. All these companies have reduced their commissions over the past few years.”

According to Phuong, while wholesalers earn VND600 per litre of petroleum products, they pay retailers only half, adding that wholesalers often get together to fix prices.

Le Viet Xe wondered about rumours that wholesalers may have a plan to take over retail outlets in Thua Thien Hue. If this occurs, he said, it will result in unfair competition.

Currently, the country has 3,000 petrol stores owned by wholesalers, along with over 10,000 other stores operated by private enterprises.

An official from the provincial Department of Industry and Trade pointed out that wholesalers may be decreasing commissions on purpose in order to force the Government's hand to allow another hike in fuel prices.

A Petrolimex store keeps running

Store claims to have run out of petrol

Staff at Huong Thuy Company idle

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