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Distributors slash diesel price, but ask for petrol price increase
Petrolimex has said that it has slashed the diesel price, but in return for this, it needs to raise the petrol price in order to balance the enterprise’s business. Experts say that the petrol and oil price management schemes still have problems.
On February 12, the world’s crude oil price, though having increased slightly, still reportedly stayed at the low level of $36/barrel. The news sparked the hope that petrol importers would slash the petrol price after they slashed the diesel price by VND500/litre.
However, importers slashed diesel prices only reluctantly after they were ordered to by the state management agencies, and they have been insisting on preserving the prices of other products, including petrol and kerosene.
Economists have estimated that if the world’s crude oil price is not higher than $42/barrel, petrol importers will make profit. Meanwhile, petrol importers say that they still cannot make profit even on the consignments of petrol they imported when the import tax was lowered to 25% from 35% (the new tax rate has been applied since February 10). Prior to that, they said, when the tax rate was 35%, they incurred the loss of VND1,500/litre of petrol.
They also said that the two decreases of taxes made so far this year (by 15% in total) just could help them cut VND500-600/litre in expenses. This spells that they still cannot slash the retail petrol price at this moment.
Vuong Thai Dung, Deputy General Director of Petrolimex, said that he can reduce the diesel price a little, as Petrolimex still can earn several hundred VND in profit per litre from diesel sales. However, Dung said, in return for the diesel price reduction, Petrolimex needs to raise the petrol price, which, according to Dung, will balance the benefits of the state, people and enterprises.
In principle, a diesel price reduction will have good impacts on the national economy, while petrol just serves people’s consumption.
Dr Vu Dinh Anh, Deputy Head of the Price and Market Research Institute under the Ministry of Finance, said that the domestic oil and petrol prices have been ‘out of tune’ with the world’s prices, and pointed out that this is because of unreasonable policies.
Currently, Vietnam is managing petrol and oil prices in accordance with the Government’s Decree 55, which says that enterprises have the right to define retail prices if they register the price adjustments with state management agencies.
However, in fact, enterprises cannot define sale prices themselves; management agencies can force enterprises to sell at the prices they want.
Most recently, the Ministries of Finance and Industry and Trade decided that the diesel price must be lowered by VND500/litre. However, the decision was not what Petrolimex wanted, and the distributor deliberately expressed its disappoval by refusing to slash petrol sale prices until the last possible moment.
“We should not regulate the market this way anymore,” Anh said.
Meanwhile, Deputy Minister of Industry and Trade Nguyen Cam Tu said that though Vietnam had made good progress towards the market pricing mechanism it will still need to take further steps before the mechanism is perfected. And for the time being, all involved parties need to accept the shortcomings of the currently-applied mechanism.
Tu said that some petrol distributors have asked to raise the petrol price by several thousand VND per litre, but the proposal was not approved by the ministries.
VietNamNet, NLD
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