Myanmar: Yangon government plans to buy, store fuel in attempt to control prices
As domestic fuel prices are expected to rise faster than global prices, the government will hedge against price volatility by buying and storing petrol onshore as demand rises during the coming fiscal year, said Yangon Chief Minister U Phyo Min Thein.
Fuel, gasoline and diesel are vital for facilitating the flow of trade in Myanmar. However, prices are higher compared to neighbouring countries, U Phyo Min Thein said during a meeting with private businesses at the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) headquarters last week.
One reason is the lack of controls and restrictions on fuel imports, which come mainly from Singapore. There are currently at least 70 companies involved in buying and selling fuel at spot prices in Myanmar.
In an attempt to control and stabilise prices on the back of rising demand, the government will establish companies to buy and store fuel from fiscal year 2018-19 onwards. “Prices are volatile if we purchase on spot. We will have greater control over fuel prices if we can buy and store large volumes of fuel,” said U Phyo Min Thein.
The Yangon government is now making preparations to buy and store fuel for up to one year in the Region. “When fuel prices drop, we will buy enough fuel for one years’ supply and store it in Yangon. As a result, Yangon will seek approvals to provide facilities and space for storage purposes,” he said, adding that maintaining sufficient fuel reserves will also help ensure stability should global shortages occur.
Meanwhile, efforts will be taken to improve existing transport infrastructure to bring fuel requirements down. Due to poor roads and the lack of railroads connecting Yangon’s ports to the hinterland, fuel and logistics costs in Myanmar are much higher than some of its neighbours. To mitigate this, efforts will be taken to upgrade Yangon’s waterways as an alternative means of transport.
“If Myanmar is going to continue using roads for trade, the cost will continue to be high. So, plans are being drawn to fix this and provide transport alternatives,” said the Chief Minister.
In addition, the Yangon government will take steps to raise the number of petrol stations available in the region. Yangon has fewer petrol stations than Mandalay due to strict approval procedures.
Even though there is ample opportunity to open petrol stations in Yangon, approval from nearby communities and townships must be obtained prior to setting up the business. “The reason for the long delay in opening petrol stations in Yangon is that approval has to be acquired from the neighbourhood first, as petrol stations are usually not welcome by the neighbourhood. As such, the regional government must handle things carefully,” said U Phyo Min Thein.