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Experts say Vietnam’s fuel prices too high
A lack of competition is keeping Vietnam’s retail fuel prices high in spite of falls in world oil prices over the past fortnight.
Experts have called for more transparency in the fuel pricing system, especially because fuel importers and traders repeatedly claim they are not making money.
While the price of A92 fuel traded in Singapore fell as much as US$8.98 a barrel in the first two weeks of July, the retail price of the fuel in Vietnam has remained unchanged at VND14,200 (79 cents) a liter.
Fuel importers in Vietnam claim they are now just making up for the substantial losses incurred when world fuel prices were high.
Recent surveys by the ministries of trade and commerce and industry found fuel importers were making a profit of at least VND800 (4.45 cents) a liter on A92 and VND1,300 (7.2 cents) a liter on diesel.
Retail petrol prices in Vietnam are now higher than in the U.S., where a liter of A92 petrol is around VND12,000 (68 cents), according to Ngo Tri Long, former deputy head of the government’s Market and Price Research Institute.
Vu Ngoc Hai, chief executive of Vietnam Oil and Gas Corporation (Petrolimex), told VietnamNet newswire on Tuesday that his agency made a net profit of VND200 billion ($11.25 million) in the first six months this year.
Petrolimex sells about 60 percent of the fuel used domestically.
By law, Vietnam’s 11 fuel importers, who sell the fuel at their branded gas stations, are only allowed to change retail prices after receiving government approval.
Within the last four months, Vietnam has increased retail fuel price five times, with the latest increase coming into effect on July 1.
Nguyen Quang A from the Institute of Development Studies said the government had not set up any real competition for Petrolimex in the retail fuel market, so it had to wear the blame for high fuel prices.
Petrolimex, as an enterprise, would always operate in the interest of making a profit, Quang A said.
Quang A said the government should make the fuel market more transparent to ensure consumers paid a reasonable price for petrol.
On Wednesday, Deputy Finance Minister Tran Van Hieu said the government will not lower the retail fuel price anytime soon. Instead it plans to increase the tax on imported petroleum products by between 5 percent and 15 percent.
The import tax on petrol and diesel is now 20 percent, while kerosene imports are taxed at 30 percent.
The increase in fuel import taxes will help fund the government’s $1 billion economic stimulus package and its VND6.8 trillion (US$382.7 million) scheme to give taxpayers a six-month holiday on paying personal income tax, Hieu said.
The deputy minister also said Vietnam’s first oil refinery, Dung Quat, which started operating in February, had not influenced retail fuel prices. Hieu said fuel from Dung Quat was expected to meet just 39 percent of Vietnam’s domestic needs in three years time.
Le Nguyen Minh
vietnamnews
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