Monday, August 21, 2017

Fuel stations to open as private operations

In this AFP a worker fills a jeep's tank at a government-run petrol station in downtown Yangon. Photo: AFPIn this AFP a worker fills a jeep's tank at a government-run petrol station in downtown Yangon. Photo: AFP

The nation’s network of recently privatised fuel filling stations was due to open for the first time under private control on May 15, according to industry sources.

It’s hoped that the move will finally lead to the extinction of the black market in fuel that has existed for decades. The move affects about 250 stations nationwide, a Ministry of Energy official told Reuters news agency back in January.

U Zaw Zaw, chairman of Max Myanmar Group of companies, told The Myanmar Times that all the privatised fuel stations have been instructed to open on May 15.

Max Myanmar was preparing open eight stations: Four in Ayeyarwady Division, two in Bago Division and two in Yangon.

At the same time, Htoo Trading is set to open another 12 stations, said the company’s executive director U Min Swe Oo.

“It will be a great challenge for businesspeople and creates many options for customers,” he said.

U Min Swe Oo said the move would make the markets more transparent and would spell the death of the black market. He added that competition would be good for the market.

What he did not say, however, was how much the fuel would be sold for.

“Regarding the price of the fuel, we are still putting our heads together on how to set the price of fuel per gallon,” U Min Swe Oo said.

However, U Zaw Zaw said the price of fuel will fluctuate according to international prices.

Government quota fuel, prior to May 15, was selling at K2500 a gallon for petrol and K3000 for diesel. Above-quota fuel had to be paid for in dollars or FEC at a rate that fluctuated between FEC3 and FEC3.25.

U Hla Maung Shwe, vice president of the Myanmar Fisheries Federation (MFF), said that after Cyclone Nargis in May 2008, several large trade organisations were allowed to import fuel. They chose to buy from Singapore and Malaysia.

“There are advantages and disadvantages to this privatisation,” he said, adding that the good point will be that anyone can buy as much as they please, while the bad point will be uncertainty over pricing and fluctuations.

What appears certain in the move to privatise the industry is that the fuel subsidy, which keeps prices artificially low, will be cut back if not completely abolished.

The privatisation will also end the quota system, meaning people will buy able to buy as much as they can afford.

Dr Maung Aung, senior economist and researcher from the Economic Studies and Research Institute (ESRI), said filling stations will be open 24 hours a day, a move that will make life easier for customers.

U Min Swe said the Htoo Trading stations will sell petrol (gasoline) and diesel for now, not any compressed natural gas (CNG).

Each station will hold between 3200 and 15,000 gallons [1 imperial gallon is 4.55 litres] of fuel.

The New Light of Myanmar newspaper announced on February 5 that Myanmar Petroleum Products Enterprise would auction the stations.

Major organisations that won the right to operate stations include the Union Solidarity and Development Association, the Union of Myanmar Economic Holdings Ltd, Asia World, Shwe Than Lwin Company, Kanbawza, Ayer Shwe Wah, information from the Ministry of Energy shows.

According to figures from the American Energy Information Agency (EIA), Myanmar’s national oil consumption in 2008 was about 41,000 barrels a day. The country produces about 22,000 barrels a day and imports the remainder, which equates to oil imports of more than 6.9 million barrels annually.

Myanmar’s Central Statistical Organisation (CSO) reports that Myanmar imported K3.192 billion, (or about $586 million using the government exchange rate of $1 = K5.451) worth of “refined mineral oil”, or fuel, in the 2008-09 fiscal year. By October of the 2009-10 year it had nearly matched that figure, with the cost of fuel imports worth K3.113 billion (or about $562 million, at K5.5313 per dollar).

The nation’s fuel stations have been in government hands since they were nationalised from 1962 to 1963 as the military government of General Ne Win embarked on “The Burmese Way to Socialism”.