Fuel retailers warn of bankruptcy if commissions not reinstated

Since August 22, when the latest adjustments in petrol and oil retail prices were made, supply has become scarcer in some localities.

Many gas stations have put up "out of stock" signs and closed.

Speaking at a conference held to discuss the difficulties faced by fuel retailers on September 21, Nguyen Thi Sinh, director of Chien Thang Petroleum and Oil Company, which has five gas stations and 10 agents in the northern province of Yen Bai, said the cost of transporting a liter of petrol from Hanoi to Yen Bai is VND700-750 (3 US cents), and it does not include labor, warehousing, and fire safety costs.

Not only commissions, but also supply is declining for retailers, she said.

Since early August his company has been seeing supply dwindle, she said.

"We sometimes receive only 27 cubic meters of fuels a day, while our requirement is 2.5 times that."

Nguyen Duc Le of the Vietnam Directorate of Market Surveillance said on inspecting gas stations in some cities and provinces, market management teams realized they had actually run out of stocks.

Since July retailers’ commissions have decreased from hundreds of dong per liter to even zero.

"Commissions are zero, and so businesses cannot cover their costs, the more they sell, the more they lose," Sinh said.

After suffering losses for months, Le Thi Nha, owner of Van Phu Enterprise in Hanoi, said profits from selling petrol and oil are not enough to pay electricity and water bills now.

"If commissions remain zero, we will have to go bankrupt."

She wanted wholesalers to resume commission payment.

Nguyen Duc Hanh, owner of Son Hai Petroleum Enterprise, said the cost of transport from wholesalers’ warehouses to retailers’ outlets is VND1,200-1,340 for a liter of petrol and VND1,130-1,250 for oil.

"The more retailers sell, the more they lose, but they are not allowed to close down."

Retailers said if they get commissions of VND1,500-1,600 per liter of petrol and VND1,400-1,500 for oil, they could cover costs.

Nguyen Thi Bich Huong of the Vietnam Association of Small and Medium Enterprises said otherwise many gas stations would have to stop selling fuel.

Hanh said the government should instruct wholesalers to pay minimum commissions to retailers.

Bui Ngoc Bao, president of the Vietnam Petroleum Association, said retailers should negotiate commissions with wholesalers and include them in contracts. Commissions are not mentioned in contracts now.