National petroleum reserve is only enough for 7 days, is Vietnam’s energy security guaranteed?

On December 26, at a special press conference, Ms. Nguyen Thi Pho Giang – Deputy General Director of the General Department of State Reserve said that the national petroleum reserve is only enough for 7 days, and the amount of the petrol reservation is stored in the petroleum storage warehouses of key enterprises.

This information is not new, it was mentioned by the Minister of Industry and Trade Nguyen Hong Dien during the questioning session before the National Assembly on March 16. At this meeting, Mr. Dien said that the national petroleum reserve is very small and can only be used in emergency situations.

According to Decrees 83 and 95 on petrol and oil trading, the storage and circulation of goods belongs to the responsibility of focal enterprises and production enterprises. They must have enough reserves to supply gasoline for at least 20 days. But in fact, the Minister of Industry and Trade said that whether the key enterprises have enough compulsory petroleum reserves is “unknown” because state reserves and corporate reserves are stored in the same places, so it is impossible to separate these two sources for inspection.

The national energy security story presented by the Ministry of Industry and Trade sounds like a story of housewives, Mrs. A’s house lacks a firewood store, so she sends it to Mrs. B’s house to have a more spacious warehouse. The truth is like a joke.

The article talks about very low national petroleum reserves

The question is, where is the state management role of the Ministry of Industry and Trade and of the Government? Are national reserves misused by corporate hubs? How to control?

Petroleum is a commodity used in most production and consumption industries, it is the lifeblood of the economy. If there is a shortage of petrol, all activities in society will be stagnant and disordered. So most countries have petroleum reserves. However, it is easy to see that the level of petroleum reserves in Vietnam is too low, especially in the current context of world economic and political fluctuations.

Of course, with such a small amount of petroleum reserves, the Government could not operate when an incident occurres. In fact, during the few months of shortage of gasoline, the Government and the Ministry of Industry and Trade found difficulties in dealing with consequences. Until now, the shortage of petrol and oil is not as serious as before, but still occurs locally in a few provinces around Saigon.

It is also because the national petroleum reserve is too low, the reserves of enterprises cannot be controlled, so when there are fluctuations in the market or there is instability in supply, the state cannot solve it.

Petrolimex’s petroleum reserve – an enterprise requested by the state to store national reserve gasoline

From the beginning of 2022, the supply of petroleum is unstable, frequently interrupted, prices fluctuate sharply, transportation costs of gasoline increase. Moreover, the discount rate prescribed by the Ministry of Finance is too low, leading to business losses and limiting working capital. Therefore, some businesses have stopped selling gasoline.

Most businesses believe that the loss of business and interrupted supply of goods is due to weak, inflexible management policies that do not keep up with market fluctuations. Another reason that the Communist government does not admit is that the country’s foreign currency reserves are already very low, not enough to supply importing businesses. This is reflected in eight solutions that the Ministry of Industry and Trade proposed in October, including the State Bank’s request to direct commercial banks to support petroleum businesses in terms of credit lines, preferential interest rates, etc. incentives, foreign currency capital, etc.

Economic experts said that the State must spend money to invest in building a separate national petroleum reserve, and the reserve must be increased to 90 days to ensure national energy security.

But so far, 8 months have passed since the National Assembly session in March, but the situation has not changed. Thus, either the Government’s inertia is too great, or there is no foreign currency to solve the problem.

A serious shortage of gasoline has been going on for several months (Translated)