Laos to look into fuel tariff exemptions

business February 11, 2017 01:00


THE GOVERNMENT of Laos will set up a committee to investigate and calculate the actual amount of petrol required by 16 major concession projects that continue to benefit from fuel tariff exemptions.

Although the government announced in August last year that it would halt the provision of tariff-free fuel to large-scale investors, these 16 projects were excluded.

The project developers had signed agreements with the government for the supply of tariff-free fuel prior to August, Deputy Minister of Finance Mr Bounchom Ubonpaseuth said on Tuesday.

“The committee we plan to set up can calculate the amount of petrol required by these 16 projects in batches or annually, but the most important thing is that the figure must be realistic based on the actual needs of the projects,” he added. 

Bounchom said new investment projects would no longer benefit from the scheme as the government wanted to plug loopholes in the import of oil. 

The government’s monthly meeting held in Vientiane on January 24-25 entrusted the Ministry of Finance to partner with the Ministry of Planning and Investment and other sectors to form the committee.

When the committee finishes calculating the amount of fuel required by the projects in question, it will report its findings to the government. 

Concerning Official Develop-ment Assistance (ODA) projects, Bounchom said that if their requirements stipulate the need for tariff-free fuel, the government may |have no choice but to continue to provide it. 

The fuel tariff exemption is part of the government’s efforts to ensure that fuel imports comply with the country’s laws and to close all gaps that allow investors or project developers to take advantage of the scheme.

By revoking the privilege, the government also hopes to ensure that more revenue can be generated from fuel imports and transparently included in the national budget.

As of May 2016, about 1.49 billion litres of fuel worth over 1.49 trillion kip, based on the oil prices at that time, had been provided tariff-free.

Minister to the Prime Minister’s Office and Government Spokesman Chaleun Yiapaoher told a press conference in August last year that investors and project developers had imported more fuel than the amount approved by the government and had sold it on local markets.

For instance, if a road construction project needed 100,000 litres of petrol, the developer might ask the government for 1 million litres of fuel tariff-free and then sell the excess.

Financial officials say tariff-free fuel and other imported materials are partly the reason for the shortfall in revenue in the last few years. 

Dr Chaleun said “We have lost a huge amount of revenue due to loopholes that have emerged in tariff exemptions on imported fuel.”

With Laos being one of the least developed countries in Asia, the offer of tariff-free oil imports was intended to expedite development, particularly of much-needed infrastructure.