Urgent need to intervene in domestic petrol market

Local petrol businesses are being put under serious pressure to increase their petrol prices due to strong fluctuations in the global market.

They have called for a price stabilisation fund to be established or the introduction of tougher measures to reduce tax instead of raising domestic petrol prices. It’s time for State management agencies to intervene in the domestic petrol market, they added.

Considerable pressure for increasing petrol prices

Recently, the Ministry of Finance has received proposals from the Mekong Oil and Gas Joint Stock Company, the Vietnam Oil Corporation, the Ho Chi Minh City Oil and Gas Company and the Vietnam National Petroleum Corporation (Petrolimex), asking the Ministry to adjust domestic petrol prices in line with the surging price on the world’s petrol market.

They insist that after two price increases, VND1,040/litre each time they still suffered losses.

According to Nguyen Xuan Chai, head of Petrolimex’s marketing department, previous to March 26, petrol had been selling at VND16,990/litre while its production costs had reached VND18,023/litre. Therefore, petrol businesses had suffered an estimated loss of VND733/litre. They had also lost between VND522-530/litre for diesel and paraffin oil.

At present, Petrolimex businesses are suffering an average loss of VND600-700/litre, while Saigon Petrol, which accounts for 8 percent of the total domestic market share, claimed that they faced losses of VND800/litre for petrol, and VND500-600/litre for oil products.

A senior spokeperson for Petrolimex said that Decree 84 allows petrol businesses to increase oil and petrol prices by 7 percent. “However, we did not adjust our petrol prices because we followed the directions issued by the Price Management Department that asked businesses not to increase their petrol prices, the Petrolimex leader explained.

How to control petrol prices?

Decree 84 states that in case the production costs of petrol increases by more than 12 percent or the increase in the petrol price makes a strong impact on socio-economic development and people’s living conditions, the State allows businesses to apply price stabilising measures through adjusting tax, using the price stabilization fund and following the current regulations.

In recent years, petrol prices on the global market have risen constantly while in Vietnam the government has asked ministries, agencies and localities to implement comprehensive measures to stabilise the macro-economy and control the inflation rate. Hence, the Price Management Department issued a memorandum asking local businesses not to increase petrol prices.

Nevertheless, local petrol businesses are continually being put under pressure as they are suffering losses, but still have to wait for instructions from the Ministry of Finance. Most of them say it’s time to use a price stabilisation fund or reduce taxes to ease their difficulties.

Tags: Vietnam petrol, Vietnam petrol market, Vietnam Petrol prices