MoF Hikes Retail Gasoline Prices Second Time This Year

MoF Hikes Retail Gasoline Prices Second Time This Year

Vietnam's Finance Ministry decided to increase retail prices of refined petroleum products from between 10 per cent to 32.6 per cent at 12am July 3 (local time: GMT + 7) to deal with escalating global oil prices.

Accordingly, retail prices of lead-free gasoline Ron 92, Ron 90 and Ron 83 will rise by VND800 a liter to VND8,800 , VND8,600 and VND8,400, respectively. Likewise, the prices of diesel oil and kerosene will also go up to VND6,500 a liter from VND5,500 and VND4,900, respectively. ( US$1=VND11,815)

This is the second time Vietnam has lifted retail prices of petroleum products this year and the fifth time since 2004.

Currently, the government, who imports refined oils to sell in the country, fixes retail prices of petroleum products.

An official from the Ministry of Finance, who didn’t want to be named, said these adjustments would partly help ease pressures of the world’s sky-high fuel prices on local oil trading firms and address illegal exports of fuel from Vietnam to China and Cambodia.

Local fuel importers were sustaining heavy losses as import costs plus business costs were higher than retail selling prices in the local market, a recent report said.

During the first five months of this year, Petrolimex, which holds 60 per cent of petroleum products market shares, earned VND53 billion (over  US$3.3 million), but in the last two weeks, it lost VND3 billion (nearly VND190,000 ) a day, according to the report.

The increase will also help curb the State’s huge budget losses due to Vietnam’s policies to subsidize local fuel importers to keep Vietnam oil prices acceptable for users.

Even with this new price hike, the State will still have to subsidize some VND5,200 billion in the next six months if the global price remains high, the ministry said, adding that the subsidy is VND8,000 billion ( US$506 million) in the first half of this year.

In the meantime, the new increase is also expected to demolish illegal oil export to neighboring countries. According to local media, about 30-40 tons of petroleum products are sent to Cambodia through a border in Long An province.

The rampant illegal exports also happen in northern Cao Bang province and southernmost Kien Giang province.

Vietnam has to import nearly all petroleum products to feed the national energy demands because it lacks refining facilities.

The Southeast Asian nation imported over 5.9 million tons of petroleum products worth more than  US$2.3 billion in the first half of this year, according to the government source.

The country, meanwhile, earned  US$3.37 billion from exporting 8.78 million tons of crude oil in the same period.

To reduce reliance on petroleum imports, Vietnam, the sixth largest crude oil exporter in Asia, is investing some  US$2.5 billion to build its first oil refinery in central Quang Ngai province.

The following table details the price rise of petroleum products on the domestic market.

• T.V