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Burma’s energy minister Brig. General Lun Thi is unhappy with the recent privatisation of petrol retailing in the country, business sources in Rangoon have told DVB.
His alleged dissatisfaction echoes critical analysts who state that the scheme is economically unsound and leading to problems with distribution. This has resulted in long queues and a thriving black market that the privatisation drive was designed to solve.
Lun Thi is now reportedly willingly waiting for the privatisation experiment with fuel retailing to fail, a Rangoon-based businessman close to the ruling junta has said. Failure would mean his Ministry of Energy (MOE) will have to intervene and reinstate its management of fuel retailing.
The main problem is seen as the strict controls on the price at which retailers can sell petrol. This only allows for a small profit margin and thus limits the incentive to distribute fuel widely throughout new stations in more remote areas of Burma.
As a result black marketeering has been occurring whereby third parties would hoard cheap fuel in order to sell it for profit in areas where there was no licensed retailer. The discrepancy in price, reportedly almost double in some areas, was meanwhile responsible for long queues at official retailers who resultantly placed a quota on the number of litres for sale per person, per visit.
The low prices are for domestically-refined petrol, which is of a lower quality than imported fuel.
Why Lun Thi is seemingly willing the project to fail is not fully known but some analysts, including Burma economics expert Sean Turnell, believe it is political; that the minister will be smarting from the loss of control over this vital area of the economy.
“This is why Burma is not a normal developing Southeast Asian nation” Turnell told DVB. “It’s why I think the whole notion of privatisation in Burma is highly questionable.”
The situation was being compared to a similar occurrence in the 1990s when the MOE transferred control over petrol pumps to the Union of Myanmar Economic Holdings (UMEH), a military “company” run by the quartermaster general, only for their management of operations to fail. They were subsequently transferred back to the MOE.
Petrol retailing has now been transferred to a number of crony-run conglomerates, such as Htoo Trading and Max Myanmar. Some have alleged that the conglomerates themselves were involved in the black market in order to turn a profit from the operations.
The move to fix fuel prices however was also seen as an effort to prevent social unrest linked to fuel price rises, as was witnessed in September 2007 with the so-called Saffron Revolution and prior to the 1988 uprising. Turnell notes that “petrol prices are always very politically sensitive”.