The government is being called on to break Myanmar’s oil trading monopoly, as prices remain high, despite falling global rates.
Around 70 companies import oil to Myanmar. The price was around US$94 per barrel in January last year, has been falling since June and is now below US$50. But the price of kerosene and gasoline in Myanmar is unchanged.
An industrial entrepreneur said: “Our oil price is still Ks 4,000. In the past, one company monopolised imports of palm oil. Despite the government easing restrictions, we still have a monopoly. We have no chance to import oil ourselves as it can only be carried by oil tankers, it is very dangerous for other ships. So we have to buy oil at the asking price.”
Due to the strong dollar, falling share prices, a decline in oil demand and increased supplies, the oil price on January 5 hit its lowest level since May 2009. London's Brent North Sea crude dropped to a similar nadir at US$52.66 a barrel.
Dr Maung Maung Lay, vice president from the Union of Myanmar Federation of Chamber of Commerce and Industry (UMFCCI), said: “Some traders directly import oil while others buy it from importers and the stock markets. I think Myanmar importers have to reduce the price of oil. Oil prices would fall if there was competition. Global traders would face action if they behaved like that. Myanmar does not have a law for it so it is impossible for the government to take legal action against them.”
In the world market, gasoline prices stood at Ks 1,840 per gallon on December 5. At the same time, in Myanmar it was selling at Ks 3,700 per gallon; diesel was Ks 4,300 per gallon; octane at Ks 4,230 per litre; and purified diesel at Ks 4,455 per litre. These prices are calculated based on 4.54 litres per gallon.
Myint Thaung, a businessman, said: “We need to calculate the buying and arrival time. Let’s suppose that it takes 10-15 days to load a tanker, we must reduce the price around 10 days after the global market has seen a decline. Have our importers agreed not to lower the price? The government needs to monitor those who may have a monopoly. Other countries have laws against it. But our government has relaxed restrictions to practise a market-oriented economic system, relying on the ‘invisible hand’ of market forces. The government has to regulate this market.”