Ministries differ on state of fuel distributors

>> Petrolimex ‘suddenly’ makes profit prior to IPO

In his Q&A session, Minister of Finance Vuong Dinh Hue affirmed that the Vietnam National Petroleum Corporation, or Petrolimex, the country’s largest fuel distributor with more than 60 per cent market share, operated with profits in the period between 2008 and 2010.

But this affirmation was rebutted by Minister of Industry and Trade Vu Huy Hoang, who said the giant fuel wholesaler actually incurred losses from oil and gasoline trading.

Earlier, many delegates called on Hue to clarify the dubious financial state of Petrolimex, since it had repeatedly reported losses but suddenly posted profits in its initial public offering (IPO) last June.

Nguyen Thu Anh, who represents Lam Dong province, also demanded that the Ministry of Finance publicise the audit results on some fuel distributors to see if the current fuel retail prices are reasonable.

Addressing the NA delegates, Hue frankly said Petrolimex has enjoyed profits, citing audit reports in the three-year period between 2008 and 2010.

Hue said Petrolimex posted a profit of VND913.7 billion ($43.8 million) in 2008, VND642 billion of which came from fuel trading activities.

In 2009 the distributor earned VND642 billion in profit from fuel trading, while the total profit was VND3.2 trillion.

In 2010, Hue said, fuel trading activities hit Petrolimex with a VND172-billion loss, but it still posted a profit of VND486 billion in other business sectors.

“In general, Petrolimex still reaped profits from fuel trading in those three years,” he concluded.

Hue added that there would never be any losses in the fuel sector if the distributors strictly followed trading regulations and if the foreign exchange rate fluctuation had not occurred earlier this year.

“The Ministry of Finance will publicise audit results on the profits and losses of fuel wholesalers when the audit is complete,” he said.

However, all of the statistics Hue provided seemed unconvincing to Hoang, the Minister of Industry and Trade.

Hoang said Petrolimex enjoyed profits during the 2008 – 2010 period; but incurred losses in the fuel trading sector.

But since Petrolimex has not released details about the losses and profits of each particular sector in its operation, the public have been duped into thinking that the company has gained profits from fuel trading, Hoang explained.

With the two ministers providing inconsistent information, NA Chairman Nguyen Sinh Hung ordered Hue to clarify the losess and profits of the fuel trading activities.

Hue stated that all statistics he had cited were from the audit results.

He reiterated that Petrolimex incurred losses in 2010 and posted both losses and profits in 2008 and 2009.

This, however, is different from his earler statement, when he said Petrolimex earned profits in both 2008 and 2009.

Hue said in the first half of this year, Petrolimex incurred a total loss of VND1.8 trillion from fuel trading.

The exchange rate difference accounted for VND1.43 billion of the loss, since the dong was depreciated by 9.3 per cent last March, Hue added.

“If the exchange rate factor is excluded, the loss is only VND520 billion,” he said.

“If the fuel wholesalers had followed the regulations to give a commission of only VND600 a liter to dealers, they would not have incurred such losses.”