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Laos: Govt to provide credit for purchase of fuel
The government will provide fuel importers with a Letter of Credit worth US$200 million for the purchase of sufficient petrol to meet the nation’s needs, Deputy Prime Minister Dr Sonexay Siphandone told the National Assembly (NA) on Thursday.
This amount could buy 200 million litres of fuel which would cover the demand for July and August at 100 million litres a month, Dr Sonexay said.
The government will continue to provide foreign currency to importers during the remainder of the year in a bid to procure sufficient fuel, the DPM said in response to questions raised by Assembly members about the government’s plans for fuel supply amid the continuing shortage.
The government has provided credit despite limited foreign currency reserves. The plunging value of the kip has placed an added burden on importers struggling to source sufficient foreign currency to buy much-needed fuel, which must all be imported.
Dr Sonexay said the government would source foreign currency from companies that export minerals and agricultural produce, which would be given to fuel importers over the remaining months of this year. The government has allocated US$60 million for use by fuel importers in June and the Ministry of Finance recently provided an additional US$10 million.
From June 1-21, as much as US$102 million was sourced to pay for imported fuel, which was enough to cover normal needs and included money sourced from commercial banks. This has enabled more petrol stations to open, the DPM said.
Laos imports all of its fuel requirements and on average imports 100-120 million litres of fuel a month.
Prior to the steep price hike, it cost US$600 to US$700 million to import sufficient quantities of fuel for one year. But the amount spent has doubled in line with the spiralling price of fuel on the world market, Dr Sonexay said.
“The demand for foreign currency has also risen sharply, so sourcing sufficient foreign currency to buy fuel is difficult,” he told Assembly members.
Laos currently buys fuel from Vietnam, Thailand, Malaysia and Singapore.
The government is looking at ways to diversify the sources of the fuel it imports so that the load is spread and disruption to one source would not cause a crisis, the DPM said.
In the longer term, the government will consider ways to promote investment in oil refinery plants in Laos where crude oil could be refined to ensure fuel security. There are currently no such plants operational in the country.
Dr Sonexay pledged that authorities in charge would take action against individuals who manipulate exchange rates unlawfully for personal gain after learning that the disparity between exchange rates offered by commercial banks and some currency exchange units was inappropriately large.
Some currency exchange units that were found to be in breach of the regulations have had their licence revoked, the DPM said.
Source: https://www.vientianetimes.org.la/freeContent/FreeConten2022_Govtto120.php