Viet Nam must invest to raise its fuel reserve capacity, said economists and policymakers during a conference on Wednesday discussing how to encourage investment from the private sector in fuel infrastructure and to stabilise fuel supply and demand.
According to Luu Binh Nhuong, deputy head of the Ombudsman Board under the Standing Committee of the National Assembly, Viet Nam cannot afford to have its fuel supply disrupted.
He said the country currently has more than five million cars; 42.8 million motorbikes and 857,000 businesses, on top of thousands of construction projects and other land and water vehicles, consuming a massive amount of fuel each day.
Nhuong said the economy could come to a standstill if the fuel supply was disrupted severely.
"Without a strategic vision and preparation, there will be times the system can no longer cope with demand," he added.
A government report showed the country spent over US$9 billion to import fuel in 2022, which covered roughly 70 per cent of domestic demand. In order to maintain and speed up economic growth in the future, a larger amount is likely required.
He stressed the importance of building a strong fuel reserve, citing examples of the US, China and India which hold, on a regular basis, millions of barrels in reserve to ensure ample supply for industries.
Nguyen Hoang Giang, deputy head of the financial planning department under the Ministry of Industry and Trade (MoIT), said economic development requires energy consumption, especially fuel, which is a strategic commodity that plays a crucial role in almost all economic sectors.
A fuel reserve could serve as a blood bank to ensure supply during emergencies.
Last year's fuel disruption that saw numerous fuel stations across the country being closed down due to lack of supply clearly showed a lack of preparation and planning, as well as subpar fuel infrastructure.
Nguyen Duc Hanh, chairman of Son Hai Petroleum Corp., said his company has been seeking capital for a fuel reserve of 40,000 cubic metres worth VND500 billion since last year. So far, he has not been able to convince any commercial banks for a loan.
"It's high time for a fuel reserve law to be promulgated," he said.
Hanh said it's extremely challenging for private businesses to fund fuel reserve infrastructure as they often require large capital resources.
He called for stronger governmental financial support and policies to help businesses access funding in the future. — VNS