Fuel consumption projected to grow 10 percent this year
Fuel consumption projected to grow 10 percent this year
Total fuel consumption in Laos is expected to increase 10 percent this year thanks to rising vehicle numbers and investment projects in the country, according to a representative of a fuel distributor.
Lao Petroleum and Gas Group member Mr Phet Chanthamaly told Vientiane Times last week that fuel consumption in Laos is projected to reach 1.1 billion litres this year, about a 10 percent increase compared to last year.
Laos will end up spending US$935 million on imported fuel as the price on the world market is US$0.80 per litre, he said.
Mr Phet who is also a manager at Lao State Fuel Enterprise told Vientiane Times that the primary cause of the fuel consumption increase was due to the growing number of vehicles and investment projects.
“The number of vehicles has seen a rapid increase over the past few years as we have already witnessed,” he said, adding that the use of more vehicles has caused fuel consumption increase accordingly.
According to a report from Ministry of Public Works and Transport, the number of vehicles including cars, trucks and motorbikes in Laos has reached more than 1 million units while the total population of Laos is only 6.5 million.
Currently many car dealers offer instalment payment finance and strong economic growth has caused the number of vehicles to increase over the past few years. Traffic jams can now be seen in the major cities.
Mr Phet said the number of investment projects, such as construction of power plants in Laos and other infrastructure development projects is also causing the increase in fuel consumption.
Mr Phet said increasing fuel consumption in Laos should enable the government to collect more revenue.
However, according to a report from the Ministry of Finance, the government is unable to collect revenue efficiently from fuel due to the large amount of tax exempt imported fuel for mega investment projects.
Some of the investment projects use the government policy to import tax free fuel and then distribute it to general consumers despite it violating the agreement with the government.
The government has decided to reject a proposal from investment projects to import 52 million litres of fuel, which the projects claimed was to substitute the amount they previously borrowed from petrol stations.
The Lao government is encouraging business people to grow crops as raw materials for ethanol and bio diesels production facilities so the country can reduce its fuel imports. However, investors have said they need more incentives as the present price of ethanol and bio-diesel produced in Laos is uncompetitive.
vientiane times
