The government made an official announcement in Vientiane on Thursday to completely halt fuel tariff exemptions in a move to close loopholes in illegal oil imports.
The move is part of the government’s efforts to ensure that fuel importation is in line with the country’s laws and to close all gaps that allow investors or project developers to take advantage of fuel tariff exemptions.
Minister to the Prime Minister’s Office and Government Spokesman Dr Chaleun Yiapaoher spoke at a press conference yesterday highlighting the government’s decision to stop oil tariff exemptions.
He said that the new move will help the government ensure more revenue can be generated from this sector and transparently included in the national budget.
“As of May 2016, about 1.49 billion litres of fuel worth over 1.49 trillion kip (at the current oil price) have been granted fuel tariff exemptions,” Dr Chaleun said.
He also said that over the past year investors or project developers have imported more fuel than the figure approved by the government and had sold it to local markets.
For instance, a road construction project needs 100,000 litres of petrol so the developer requests the government to grant 1 million litres tariff free and then sells the excess.
Financial officials have said the tariff free fuel and other imported materials are part of the cause contributing to revenue shortfall over the last few fiscal years.
Dr Chaleun said “We have lost a huge amount of revenue from loopholes that have emerged in the tariff exemptions on imported fuel.”
“From now on our government will no longer grant oil tariff exemptions to any companies or projects across the country,” he added.
The government also announced that it will inspect projects which have been awarded tariff free oil imports over the past several years to ensure all projects had followed the law in this regard.
Over the past three years National Assembly members have often raised concerns about the loopholes related to regulating tariff free imports
for development projects at its’ sessions, saying that the loopholes have impacted on state revenue. The government says the tariff free import of fuel was mainly granted to investment projects in sectors or regions that the government promoted, projects funded through loans or aid from foreign countries as well as projects which were linked to national defense and public security.
Given that Laos is one of the least developed countries in Asia, the tariff free oil imports aimed to expedite development in the country particularly in infrastructure development.
After this scheme has been carried out for several years, the government found that loopholes had emerged from the fuel tariff exemptions and that they had lost significant revenue from these gaps.
A meeting held between Prime Minister Thongloun Sisoulith and his Deputy Prime Ministers in Vientiane recently came to the decision to halt fuel tariff exemptions.
Source: Vientiane Times