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Petrol price still high, despite global fall
Petrol retailers claim they cannot reduce petrol and oil prices as they remain confused by the application of the petrol price stabilisation fund mechanism.
According to Official Letter No.6526/BTC-VP recently issued by the Ministry of Finance, the State does not require petrol retailers to reduce the retail price of petrol and oil despite a decline in global petrol and oil prices.
The decline in price affected crude oil products but not commercial products, said retailers. That meant the global prices of commercial products remained expensive.
On average, global commercial fuel products over a 30-day period (From April 16 to May 16) were VND293-820 per litre or kilo higher than the retail price for petrol and oil products on the domestic market.
After compensation from the stabilisation fund for the losses, the retailers had covered their losses, but had yet made any profits from their trading of petrol and oil products, the ministry said.
For managing petrol and oil prices in the future, the ministry would closely follow the development of world petrol and oil prices in order to stabilise the domestic market and avoid fuel shortages.
The ministry would also flexibly use taxes, fees and the stabilisation fund to manage petrol and oil retail prices.
In the case of a continuing decline in petrol and oil prices on the world market, the ministry would end compensation and require the domestic retailers to reduce their retail petrol and oil prices.
In March, retailers complained they had racked-up huge losses from trading petrol and oil because world prices were so high.
From April, the petrol price stabilisation fund provided a VND500 per litre subsidy for petrol products and VND400 per litre for diesel oil and kerosene to reduce dealer losses and stabilise domestic prices.
However, despite the subsidy, they still had to pay VND300 per litre of petrol to contribute to the stabilisation fund, as payments made to the fund were tied to crude oil prices, not retail petrol prices.
Retailers are confused that despite the mechanism paying them compensation, they are still being required to pay into the fund.
Petrol and oil retailers said that as the retailers where unable to make a profit, it was impossible for them to make payments to the petrol price stabilisation fund.
A representative of the Viet Nam National Petroleum Corporation (Petrolimex) said that with the current petrol and oil price management system, retailers were finding it next to impossible to cut their retail prices.
Petrolimex, the largest wholesaler of petrol and oil on the domestic market, submitted its recommendations on using the fund to the Ministry of Finance and was waiting for reply from the ministry.
Deputy Director of the Market and Price Research Institute Vu Dinh Anh said that currently, retailers should not delay reductions in the retail price of petrol and oil by citing their losses and moaning about an imperfect price stabilisation mechanism.
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