Vietnam Cannot Cut Petrol Prices at This Moment

Vietnam cannot slash retail petroleum prices at this moment despite a considerable fall in the global crude oil price in recent days as both Vietnamese government and petrol traders need more time to recover after long-endured losses, said Vuong Thai Dung, deputy general director of Vietnam National Petroleum Corp (Petrolimex).

 

Only after the price of petrol has decreased for a long time and stayed at a low level for a certain period could Vietnam consider lowering the retail petrol price, Dung was cited by state media as saying on July 30.

 

Before July 21, 2008 when the decision on raising the retail petrol price was announced, the retail petrol price had been lower than the cost price; and importers suffered the loss of VND4,000 (US$0.24) for every liter of oil.

 

Importers have been making a profit of VND200/liter of gasoline in the last few days, while they are still losing VND3,000/liter of oil, Dung attributed.

 

As Petrolimex had to sell petrol at prices lower than the import prices, it incurred the loss of over VND5 trillion (US$303.03 million) in the first six months of the year, including VND950 billion (US$57.57 million) for petrol sale, and VND4.2 trillion (US$254.54 million) for oil.

 

Even if the global price decreases, the Vietnamese government would still be unable to recover its losses of VND11 trillion (US$687.5 million) of subsidizing domestic petroleum importers due to the soar in the world oil price predicted at US$140 this year against US$70 last year, the official elaborated.

 

“We are really looking forward to lower sale prices, but we do not think that relevant agencies will dare to order the lowering of retail prices in the near future, because this would be burdensome on the state budget,” Dung added.

 

Currently, gasoline A92 is priced at VND19,000 (US$1.15) per liter in Vietnam while a liter of diesel 0.05S is sold at VND15,950 (US$0.96), paraffin oil at VND20,000 (US$1.21), and mazut at VND13,000 (US$0.78).

 

Vietnam is forecast to lose VND44,772 billion (US$2.71 billion) in the second half of this year if it did not apply petrol price hike in the circumstance of global crude oil prices to hit US$140 per barrel, brining total loss for this year to VND60 trillion (US$3.6 billion). (Pioneer Online, VietNamNet)