Petrol subsidy up to offset oil prices

In an effort to stabilise domestic fuel prices, the Ministry of Finance will compensate petrol dealers for losses incurred during the current fluctuation in world oil prices.

Under a ministry decision taking effect today, petrol distributors and dealers will receive an additional VND600 per litre in subsidies, increasing the total subsidy per litre to VND1,600.

Dealers have been receiving VND1,200 per litre from the fuel price stabilisation fund for petrol or kerosene, VND1,000 per litre of diesel, and VND700/kg for fuel oil sold.

But, according to leading petroleum distributor Petrolimex, importers and dealers are still suffering losses of VND800-900 per litre of petrol.

In the past few days, wholesale prices of A92 petrol have surged to around US$101.85 per barrel, while kerosene and diesel prices have hit $105.35 and $105.55, respectively.

To further control prices, the ministry yesterday cut the import tax on refined petroleum products to zero, director of the ministry’s Department of Pricing Management Nguyen Tien Thoa told Viet Nam News.

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.

“Part of the subsidies have been paid by consumers via the fuel price stabilisation fund, while the rest was offset by import tax adjustment,” said Deputy Minister of Finance Tran Van Hieu.

Consumers pay VND300 per litre of petrol towards replenishing the price stabilisation fund. Meanwhile, import taxes on petroleum products have already been cut twice in recent months, lowering the tax on imported petrol from 20 per cent to 6 per cent and the tax on diesel from 15 per cent to 2 per cent.

At a meeting on Thursday, the ministries of Finance and of Industry and Trade ordered petroleum distributors to provide sufficient fuel supplies to meet domestic demand. The Ministry of Industry and Trade also asked the companies to compute the amount of fuel which would be required for all of 2011.

The Prime Minister has also requested the State Bank of Viet Nam ensure sufficient supplies of foreign currency for fuel importers.

The Ministry of Finance, meanwhile, warned against fuel speculation and smuggling. — VNS

Tags: Vietnam petrol, Vietnam Petrol prices