Import tariff down, petrol price won’t follow suit

Directors of key petrol distributors have affirmed that they will not reduce petrol sale prices despite the new Ministry of Finance’s decision to slash import tariffs.

The Ministry of Finance (MOF) on April 21 announced its decision to reduce import tariffs on petroleum products in an effort to keep the petroleum prices stabilized. The petrol import tariff is now 17 percent instead of 20 percent, while the import tariffs on kerosene and diesel are 10 percent instead of 15 percent.

Petroleum distributors say that despite the import tariff decreases, they will not reduce the sale prices because they are still incurring heavy losses. The distributors are not allowed to raise retail prices, since the Government has decided to keep the petroleum prices stable, at least until the end of June 2010, while the prices in the world have risen.

According to the Vietnam Petroleum Import-Export Corporation (Petrolimex), by late last week, the 30-day average price of A92 petrol in Singaporean market were $90.61 per barrel, while the prices of diesel 0.05S, kerosene, 3.5S mazut were 93.06, 92.31 per barrel and $481.26 dollar per tonne, respectively.

With such import prices, importers are still incurring heavy loss of 1,417 dong per litre for every RON92 litre of petrol sold, 1,606 dong for every litre of diesel, 1,611 dong for every litre of kerosene, and 554 dong per litre of mazut.

Other petroleum distributors have also reportedly incurred losses of some 1000 dong per litre of products sold.

In order to ease the burden on enterprises, the Ministry of Finance has used the petroleum price stabilization fund to compensate the loss incurred by petroleum importers and distributors. However, the distributors said that the move, together with the tariff reduction, have not helped much.

VnMedia newspaper quoted Vuong Thai Dung, Deputy General Director of Petrolimex, as saying that enterprises are ‘incurring record losses’.

“Don’t think that the Ministry of Finance’s on slashing import tariff will lead to the petroleum retail price decreases. This will not happen,” Dung affirmed, adding that the import tariff reduction just helps enterprises a little.

“While enterprises are still taking heavy loss, they will not think of slashing retail prices,” he said

Sharing the same view, Vuong Dinh Dung, General Director of Military Petroleum Corporation said that enterprise have to cut down management and business expenses in order to fulfill the request by the Government to keep the prices stable until June 2010.

In related news, the Ministry of Finance has released a decision which says that the ministry, together with the Ministry of Industry and Trade will try to keep the electricity and coal prices stable 2010 in an effort to curb inflation and obtain the economic growth rate of 6.5 percent in 2010.

VnMedia

Tags: Vietnam petrol, Vietnam petrol import tax, Vietnam Petrol prices