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Oil importers drowning in red ink

Petroleum importers in HCM City are racking up multi-million dollar losses as their retail prices remain fixed while global oil prices spiral.

Nine importers have been estimated to suffer total losses of VND1.2 trillion (US$76 million) in the first three months of the year, pushing some to the brink of bankruptcy unless the Government provides adequate compensation.

Firms are importing coal at $46 per barrel, a jump from $34 earlier this year. Viet Nam�€™s importers said at current import prices and with their retail prices fixed at VND5,600-6,000 per litre, they were losing from VND350 to VND500 per litre.

The Government restricted oil imports to nine enterprises and fixed retail prices on March 1 in a bid to control the local supply.

Experts have said that compensation is unlikely. The Ministry of Finance claimed a deficit of VND1.1 trillion ($69 million) in taxes after the tariff cuts on petrol and gasoline earlier this year.

The Government cut petrol tariffs to 5 per cent on January 1.

Crude oil and other petroleum product prices are forecast to continue spiking following OPEC�€™s decision to cut 25 per cent of its output as of April 1.

Eighteen-year lows in US oil reserves and political instability in oil-producing nations are also viewed as factors behind the high prices.

VNCG-VDC1 - (02/04/2004)

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