Vietnam’s Ministry of Trade is mulling the possibility of loosening state control over petrol retail prices by drafting a regulation empowering petrol distributors to set the prices.
The new decree, once approved by the government, will allow petrol traders to establish retail prices themselves on the basis of import taxes, which will be set a year in advance by the government.
This ruling will replace Decision No 187/CP in 2003 governing petroleum management, which stipulates that only the Government can fix petrol prices, as well as other fuel products.
The move is an effort to reduce pressure on the state over subsidies, and harmonize domestic petrol prices with the global market.
The government is moving towards lifting subsidies for oil traders and importers, leaving local gasoline prices to market forces from 2008.
A petrol trading company said handing over the right of setting petrol prices to traders would support them to become profitable, and retail tariffs would be fairer for consumers.
Vietnam periodically adjusts import taxes and retail prices to cope with global oil price volatility and to control petrol importer profits.
However, the mechanism has failed to jive with global market fluctuations over the past years.
Following a decision of by the ministry, petrol prices were lowered by VND400 per liter down to VND10,100 for A92 petrol from January 13.
The slight decrease comes on the heels of low global gas prices, with the ministry holding true to its statement that if world prices stayed below $60 per barrel mark, it would decrease prices.
Despite being the third largest crude producer in Southeast Asia, Vietnam still lacks major refining facilities and remains heavily dependent on petroleum product imports.
The country is reported to earn $8.32 billion from crude oil export, while spending $5.85 billion on refined oil products in 2006. (Thanh Nien Online)
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