Fuel shortage hits Vietnam in wake of surging world prices HANOI - A mounting fuel shortage is crippling small businesses in Vietnam in the wake of the three-fold increase in world oil prices in the twelve months to March, oil and trade officials said on Tuesday. As world prices hit nine-year highs last month, reaching more than 30 dollars a barrel, Vietnam's communist government refused to make more than token increases in the retail price of petroleum products, leaving state-run importers facing massive losses. A 100 dong (less than a cent) a litre increase in March was only followed by another similar rise earlier this month after much soul-searching in the government press about its impact on the poor. Officials at Vietnam's biggest oil importer, Petrolimex, which assures 57 percent of the country's supplies, said the company was running up huge losses despite the price increases. "In first quarter of the year, Petrolimex had to make up losses estimated at 300 billion dong (21.4 million dollars) despite the government's decision to raise fuel prices twice since the beginning of the year," the chairman of the company's administration department, Phan Thanh Son, told AFP. He said the government-regulated retail price for fuel oil was still 28 percent lower than the import price. As a result the company had cut imports to 1.4 million tonnes in the first quarter against sales of 1.588 million. Trade ministry officials conceded that the scale of the losses had forced several of Vietnam's nine suppliers to cut their imports. "Some oil import companies cannot bear the losses caused by the difference between the government-regulated sale price and the import price," an official in the ministry's market control department told AFP. "Some of them have been delaying oil shipments to avoid the risks," the official said asking not to be named. "As a result, many places in central and southern Vietnam are short of oil for production, especially in coastal areas and areas growing commercial crops." In the southern coastal province of Minh Hai, 350 fishing ships have had to stop operations because of the lack of fuel, officials said. Supplies are only sufficient to meet 70 percent of the monthly demand for fishing boats of between 11.5 million and 12 million litres. In the provinces of Lam Dong and Dak Lak on the border with Cambodia, officials said the fuel shortage was hitting the coffee crop as supply was only sufficient to meet two-thirds of demand. Trade ministry officials said the mounting shortages had made it increasingly difficult for them to control the retail price. Not only is there a growing black market in smuggled fuel but retailers have also been taking advantage of the surplus in demand over supply to sell state-distributed fuel at way above the government-regulated price. "The government regulates retailers to sell oil at 3,700 dong (26 cents) a litre but in practice the product is sold on the marketplace for as much as 4,600 (33 cents) a litre," a ministry official told AFP. "Small producers cannot afford the inflated prices," the official said. Vietnam is a crude producer but, until a first refinery under construction in the centre of the country starts operating in 2003, it will remain dependent on imports for all petroleum products. AFP - April 11, 2000.