Fuel traders overstate losses, make non-core investments

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The Finance Ministry has found that major Vietnamese importers of oil products made smaller losses than they previously reported.

Petrolimex, the largest fuel trader with a market share of around 60 percent, had reported losses of VND1.8 trillion (US$85.7 million) in the first six months. However, the actual loss was only around VND1.3 trillion, according to the ministry.

The disparity existed because the importer paid higher commissions to retailers than allowed. The commissions are capped at VND600 per liter, but Petrolimex paid up to VND1,000 per liter.

Another importer, PVOil, even offered commissions at VND1,050 per liter in July, the ministry said.

Nguyen Tien Thoa, head of the ministry's Price Management Department, said fuel companies cannot pass the high commissions on to consumers.

"The companies have always sought permission to include the high commissions in their expenses but the ministry will never accept that," he told Thanh Nien.

The new findings were made during an inspection launched into pricing at four major fuel traders. The move came after a heated debate between government officials over whether Petrolimex was making profit or losses and whether the Finance Ministry's order for a price cut in August was reasonable.

Based on prices calculated using import costs as of August 26, the price cut was rational, said Deputy Finance Minister Vu Thi Mai. If fuel companies had paid out the right commissions, they would have reported profits instead, she said.

The Finance Ministry will continue to monitor the fuel companies closely before announcing any penalty, Mai said Monday.

According to the ministry, excluding the illegitimate excessive commission payments, Petrolimex actually made a profit of VND130 billion between July 1 and August 26. Ho Chi Minh City-based Saigon Petro posted a loss of VND44.6 billion during the period but in fact it should have reported a VND48 billion profit.

The ministry said while Petrolimex reported losses, it invested nearly VND3.8 trillion in non-core sectors in 2010, including VND1.27 trillion in banking, insurance and securities sectors. These investments accounted for 35.7 percent of the company's registered capital, but they proved ineffective, according to the Ministry.

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