Petrol dealers call for price adjustment

Petrol dealers and distributors have asked the ministries of finance and industry and trade to adjust petrol prices in the near future due to rising global fuel prices while the domestic stabilisation fund has shown signs of running out of money.

Last Thursday, the Ministry of Finance (MoF) allowed petrol dealers and distributors to receive more compensation from the fuel price stabilisation fund for losses incurred during the fluctuation in world oil prices. Of this, petrol distributors and dealers were allowed to be offset an additional VND450 and VND700 per litre of petrol and diesel in subsidies, increasing the total subsidy per litre to VND1,650 and VND2,300, respectively.

Part of the subsidies have been paid by consumers via the fuel price stabilisation fund, while the rest was offset by import tax adjustments.

In reality, the State and consumers have paid around VND11 trillion (US$529 million) with VND 3.5 trillion ($168 million) from the fuel price stabilisation fund, with the remainder sourced from import tax adjustments over the past few months, according to the MoF.

Consumers pay VND300 per litre of petrol towards replenishing the price stabilisation fund. Meanwhile, import taxes on petroleum products have already been cut three times in recent months, lowering the tax on imported petrol and diesel from 15-20 per cent to 2-5 per cent.

Due to heavy subsidies and favourable tax policies, domestic petrol prices have increased only 2.8 per cent since early 2010, compared to nearly 30 per cent on the global market, according to the MoF.

In recent months the fuel stabilisation fund had helped curb petrol retail prices. However, the fund had been running low of finances to pay petrol price compensation, said an official of the leading petroleum distributor Viet Nam National Petroleum Corporation (Petrolimex).

Huge losses

In the past few days, wholesale prices of A92 petrol have surged to around $105.37 per barrel, while crude oil prices have hit $113 per barrel. Meanwhile, the Vietnamese dong devalued 9.3 per cent against US dollar last week which also caused petrol distributors to suffer more losses.

While dealers suffered a loss of at least VND2,000 per litre of petrol, cross-border fuel smuggling was rife while several gas stations closed or increased retail prices themselves in several provinces.

At the meeting between the Government and State-owned corporations and economic groups in Ha Noi yesterday, General Director of Petrolimex Bui Ngoc Bao said importers and dealers were still suffering losses of VND100 billion ($4.8 million) a day due to new forex between Vietnamese dong and US dollar and the gap between the import and selling petrol prices.

According to Petrolimex’s calculation, with prices of A92 petrol of $105.37 per barrel (159 litres) with additional overheads and taxes on Tuesday; it should be sold at VND19,117 instead of the current selling price of only VND16,400 in the domestic market.

“Petrolimex sells 25,000 litres of petrol per day at a loss of VND2,700 (13 cents) per litre so the corporation alone suffered a loss of VND70 billion ($3.3 million) per day,” he said, adding that the compensation for losses from the stabilisation fund for the entire year was insufficient as it was able to offset losses for one month only.

Director of Military Petroleum Company Vuong Dinh Dung said the appreciation of the US dollar against Vietnamese dong had caused his company to incur losses of VND2,900 and VND3,500 per each litre of gasoline and diesel, respectively.

Petrol dealers and distributors were now hoping petroleum prices would be adjusted based on Government Decree 84 which related to petrol price stabilisation.

The decree allows businesses to adjust petrol prices up to 7 per cent when world petrol prices fluctuate 7 per cent over 30 consecutive days. When global oil prices wavered between seven to 12 per cent, enterprises were allowed to increase prices by more 60 per cent of the increase with the remaining 40 per cent offset by an import tax adjustment and the fuel stabilisation fund. — VNS

Tags: Vietnam petrol, Vietnam Petrol prices