Fuel Shortage Soon To Be Resolved, Lao Govt Says
Source: Vientiane Times
The government says the fuel crisis will be resolved in the near future as it will provide Thai baht and US dollars to fuel importers by authorising additional foreign currency payments to oil companies so they can import more fuel.
The announcement came after several emergency meetings in recent days to find solutions to the fuel shortage.
Importers need at least US$100 million each month to buy enough fuel for the country and, in the short-term, the government will seek to provide up to US$60 million.
The government is increasing monetary reserves from 30 percent to 40 percent of demand and continuing to look for additional sources of foreign currency. In addition, the exchange rate at currency exchange units has been adjusted to be different from rates offered by commercial banks.
Foreign currency outflows have outpaced inflows, resulting in a lack of foreign currency, and making it harder to pay for imports. This has meant that many importers have been unable to buy more fuel.
The President of the Lao Fuel and Gas Association, Mr Sysangkhom Khotnhotha, said on Thursday that importers are struggling to buy sufficient fuel to meet the country’s needs under the support of the government.
The association has called on all concerned parties to help resolve the fuel crisis, he added.
Oil output has failed to keep pace with rising demand by countries pursuing economic recovery following the Covid-19 pandemic, while the ongoing conflict between Russia and Ukraine has exacerbated the situation.
Problems caused by two years of lockdowns and restrictions for Covid-19 are now being compounded by rising prices, especially for fuel and food, partly because of Russia-Ukraine conflict and the rapid depreciation of the kip, Mr Sysangkhom said.
Laos and other developing countries have been told to strengthen resource mobilisation and spending efficiency, as well as tighten taxation collection to restore macroeconomic stability.
Laos also needs to strengthen debt management and transparency, improve the stability of the finance sector through legal and regulatory tools, and scale-up targeted cash transfers to the poor.
In addition, Laos must come up with new strategies for the future in line with the current socio-economic situation.
Mr Sysangkhom said the country does not yet have oil reserves or a fuel reserve fund, and that importers should not have to rely on the central bank, commercial banks, and currency traders to access foreign currency.
A member of the Lao Fuel and Gas Association who asked not to be named said fuel businesses and importers have been struggling for months to supply enough fuel to meet public demand due to fluctuating currency exchange rates and the volatile global oil market.
The government will have to make some policy changes around fuel imports and modify management of the process, as well as tackling the unfavourable currency exchange rate, which is the root cause of the problem, he added.