Home MMBIZ News Petrol Traders Cutting Prices to Prevent Black Market Sales

Petrol Traders Cutting Prices to Prevent Black Market Sales

The Myanmar Petroleum Traders Association said it is carefully coordinating with industry players to cut the domestic fuel prices to reflect the global oil prices that have been falling to a multi-year low.

Fuel imports reach Myanmar’s ports more than two weeks after the order was made, making it unfeasible for dealers to lower local fuel prices at the same time as slumps occur in the international market, and therefore the association is taking other measures to manage the situation, Dr Win Myint, secretary general of the association, told Myanmar Business Today.

“When importing fuels, it took at least two weeks to fix the contract and secure shipments. The oil price at the time of the transaction and at the time when products physically get here may not be the same. So we are working to let the price decrease slowly to prevent steep losses,” he said.

He said that if the authorities intervene to fix the fuel price, they risk hurting the market and emergence of a black market so the association is handling the price management step by step.

There are over 20,000 petrol stations in Myanmar and 60 companies that distribute fuel. Although the wholesale price can be set to match the global prices, retail outlets cannot lower prices as quickly, and the association is coordinating a plan to cut the prices by K30 per liter per day.

The association has asked petrol stations to decrease the price by K30 per liter since December and the low-grade petrol price has decreased to K710 per liter as of the second week of January from K890 a week before, Dr Win Myint said, adding that the association is working towards reducing the gap between the wholesale and retail fuel prices.

As of January 22, pumps in Yangon were selling 92 RON grade petrol for K550 per liter, 95 RON grade petrol for K859 per litre, low-grade diesel for K650 per litre and premium diesel at K730 per litre.

While the global oil prices have fallen rapidly, the slow pace at which domestic fuel prices are going down can be attributed to monopolistic fuel distributors, local drivers complain.

Dr Win Myint said that fuel prices cannot be fixed in a market-oriented economy and factors such as local demand and supply, transportation and the capacity of the supply chain are also important in determining the price.

Although wholesale prices can be adjusted in line with the international market, retail prices cannot be changed in a very short time, he said.

“Wholesale prices can be kept unchanged for only about five days and with the incoming new supply the prices will decline close to the international level. But for retail prices, there are only a small number of pumps in Yangon so they can withstand the market trend and maintain the prices.”

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