Petroleum stations closure make negligible impacts on local market

Authority announced that around 1,065 gas stations nationwide ceased operations in the first quarter of this year. In Ho Chi Minh City alone, 34 gas stations closed in the first 8 months of the year, as reported by the Department of Industry and Trade.

Resident Le Minh Han, residing on National Highway 1A, Tan Thoi Hiep Ward of Ho Chi Minh City’s District 12 drove his family to a shopping center in Tan Phu District to shop for the holidays.

While driving on the National Highway 1A, under the Quang Trung overpass, his vehicle ran out of gas. As he knew that a few hundred meters away there was a Z11 gas station operating, so he wasn't too worried. However, he didn't expect that when he got there, the gas station had a sign saying it was temporarily closed for repairs. So he had to walk a kilometer to find another gas station, said Mr. Han.

Similarly, resident Huynh Ngoc Hoa living on Cong Hoa Street in Tan Binh District went to work on the national holiday from District 12 to Nguyen Kiem overpass in Go Vap District and also missed her gas station because the gas station was closed and temporarily suspended.

Ms. Hoa claims that there were once two well-known gas stations along the route from the foot of the Quang Trung flyover towards the Nguyen Kiem overpass: Saigon Petro and Gas Station No. 7. However, both of these establishments are currently temporarily closed. Not only have they temporarily stopped selling, but a lot of gas stations have also closed early, so if people are subjective and follow their routines, it will be simple for both locals and visitors to push their bikes or walk to locations with gas stations!

Disclosing the reason for the temporary suspension of operations, some gas station owners in Ho Chi Minh City said it was due to business losses.

The discount from the main enterprise to the distributors (during the pandemic) was very low, even no discount, so the enterprise could not survive. Some gas stations even had to put them up for sale to pay off bank debts, said a gas station owner.

According to the petroleum business community, the situation became more gloomy when the Ministry of Industry and Trade recently informed about the revocation of the certificates of eligibility to act as petroleum distributors of 16 enterprises in Hanoi, Ho Chi Minh City, Nam Dinh, Hai Phong, Quang Nam according to the enterprises' wishes to request a return of their licenses.

In a talk with reporters from SGGP Newspaper, a representative of Petrolimex - with roughly 50 percent of the market and 5,500 gas stations countrywide - confirmed that the company is able to provide the market with oil and gasoline. There is no scarcity of product to worry about among consumers.

The Vietnam Oil Corporation (PVOil) has an ample supply of gasoline and oil because it has contracts in place to purchase these commodities from two domestic oil refineries in addition to imported and blended goods to meet system requirements, according to Mr. Cao Hoai Duong, Chairman of the Board of Directors of PVOil. The distributor discount rate for gasoline and oil has been consistent between VND900–VND1,500 per liter, with occasional increases to VND2,000 per liter.

Meanwhile, according to statistics from the Vietnam Petroleum Association, more than 6 percent gas stations out of total number of gas stations nationwide closed, so this doesn’t make great impact on the local market.

On the other hand, enterprises such as Vietnam National Petroleum Corporation (Petrolimex), Vietnam Oil Corporation (PVOil), Military Petroleum Corporation (Mipec), Ho Chi Minh City Petroleum Company Limited (Saigonpetro) supply up to about 80 percent of the total amount of gasoline on the market, so there is absolutely no need to worry about a shortage of goods.

According to statistics from the Vietnam Petroleum Association, the closure of gas stations represents only slightly over 6 percent of the total number of gas stations in the country, thus having an insignificant impact on the market.

Additionally, major enterprises like Vietnam National Petroleum Corporation (Petrolimex), Vietnam Oil Corporation (PVOil), Military Petroleum Corporation (Mipec), Ho Chi Minh City Petroleum Company Limited (Saigonpetro) supply approximately 80 percent of the total gasoline volume in the market, ensuring that there will be no shortage of goods.

Being a distributor, former General Director of Additives and Petroleum Products Development Joint Stock Company (APP) Hoang Trung Dung said that businesses must accept competition. If it is too difficult and there are prolonged losses, they will be forced to close down and transfer to another unit.

However, management agencies need to develop regulations that are close to the market, helping businesses to survive. Commenting on the draft decree on petroleum trading chaired by the Ministry of Industry and Trade, Mr. Dung suggested that distributors should be allowed to import, trade with each other, and buy directly from oil refineries in order to compete on high price discounts and have enough flexible supply for the market.