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Customers at a Lang Son petrol station. Customers have expressed happiness about the negligible reduction in petrol prices made yesterday morning. — VNA/VNS Photo Tran Viet |
HA NOI — As world oil prices have eased since the end of last month, the Ministry of Finance yesterday slashed domestic petrol prices by VND1,000 per litre.
The prices are now VND18,000 per litre for A92 gasoline, VND18,300 for A95 and VND19,000 for kerosene.
Diesel, trading at VND15,950 per litre, will continue to be determined by the market. For this commodity, 70 per cent of losses will be compensated by the Government and 30 per cent shared among consumers.
Petrol import duty for the commodities remains at zero per cent, according to the ministry.
The Ministry of Finance on July 21 announced an unexpected rise of 31 per cent in domestic petrol prices, the highest increase ever, to cope with world oil price hikes. Oil hit a record high of US$147 per barrel in mid-July, putting a heavy burden on the State’s budget as well as on local petrol businesses.
Oil prices have now dropped about 23 per cent from last month’s peak as a result of falling US crude demand. Crude prices on Tuesday reached a three-month low of $112.3 but approached $117 yesterday after US gasoline supplies fell more than expected in a weekly government report.
General director of the Viet Nam National Petroleum Corporation (Petrolimex) Bui Ngoc Bao said with current prices on the domestic and world market, petrol dealers have made profits.
Bao calculates that petrol importers can now make a profit of VND4,500-5,000 for a litre of A92 gasoline and VND2,000 for a litre of oil.
“The price adjustment is necessary to help ease pressure on companies’ production and business activities as well as people’s lives,” said deputy minister of finance, Tran Xuan Ha.
“The news excites us,” said Vu Quang Thanh, head of a Petec gas station in HCM City. “Purchasing power at our station has dropped about 20 per cent since last month’s petrol price hikes of 30 per cent.”
Consumers expect more
“It’s good news but the price adjustment is not very significant,” said Tran Quang Duc, a motorbike taxi (locally called xe om) driver in Ha Noi who spends around VND30,000-45,000 ($1.8-2.7) a day on gasoline.
“A cut of VND2,000-3,000 would excite people more,” said Tran Hoang Duong, a student from the Foreign Trade University. “Petrol prices were raised to VND19,000 per litre when the world oil price reached $135 a barrel; now that oil is around $115 a barrel, a cut of VND1,000 is not enough.”
“I’m very glad to hear the news,” said Hoang Hai Thu, a housewife. “But I wonder when or if prices of other commodities will drop; the prices of goods remain high despite petrol price declines.”
Why only VND1,000?
“Petrol dealers still suffer big losses overall,” finance deputy minister Ha said, adding that losses have mounted to hundreds of billions of dong in the first seven months of the year.
Firms still have significant volumes of petrol in stock, imported when world oil prices skyrocketed. A sharp cut in retail prices now would cause them even more difficulties.
“The way I look at it, any price cut is good,” Ha said. “A drop of VND1,000 per litre is not significant to each individual, but means quite a lot to society at large in the context of the Government’s efforts to curb inflation.
“The adjustment is good for August’s consumer price index [CPI],” he said. “I believe prices in the general market will go down, particularly transportation costs.”
Ha said the ministry would ask transportation firms, including taxi firms, to adjust their charges. Taxi companies in both Ha Noi and HCM City in late July raised fares by 15-20 per cent while some coach companies raised them 8-30 per cent to cope with the unexpected petrol price hike.
“If world oil prices continue to fall, we will consider reasonable adjustments in domestic prices,” he said. “But I must stress that the domestic petrol price is not simply based on world oil prices but on many factors, controlling inflation being of top priority.”
Deputy Minister of Industry and Trade Nguyen Cam Tu said the ministry was considering establishing a petrol market stabilisation fund. “The matter is how to raise capital sources, especially when the Government still has to compensate large sums to petrol dealers,” he said.
Tu said dealers should follow domestic as well as global market developments more closely in order to have more effective import plans that minimise fallout from price fluctuations.
Despite the petrol price cut, Vietnam Airlines, Jetstar Pacific and Vasco will apply fuel surcharges of VND50,000-180,000 ($3.1-11.2) per one-way ticket for local flights from today, as approved by the Government last Friday.
The Ministry of Finance in late June removed the import tax levied on fuel for the aviation industry in a decision aimed at helping domestic airliners reduce losses during the period of rising fuel prices. “But airliners are still facing difficulties,” Ha said. —