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Govt to subsidise fuel costs: Commerce Minister
The government will subsidise the price of fuel as one measure to prevent higher inflation, Minister of Industry and Commerce Dr Nam Vinhaket announced this week.
“We haven't subsidised fuel prices yet, but we will do so when prices of the commodity reach a level that will cause higher inflation,” he said in an interview with Lao journalists at a press conference held at the Ministry of Industry and Commerce on Wednesday.
He said the government had experience in subsidising fuel, as it had done so when the price of crude oil in the world market reached US$130 per barrel at the end of 2008, adding that the government will use the state budget to subsidise fuel prices.
Dr Nam said he was unable to provide more information regarding the timing and size of the subsidy, adding that officials will need to make calculations before the government makes a decision on the issue.
According to officials from the ministry's Domestic Trade Department and the Lao Petroleum and Gas Group, the government will try to keep the price of diesel below 10,000 kip per litre and regular petrol below 11,000 kip a litre.
The government is not expected to intervene in market prices for premium petrol as it believes that most consumers who use that type of fuel are wealthy and can afford to pay higher prices.
At present, in Vientiane the price of regular petrol is 10,490 kip per litre, while diesel is at 9,370 kip per litre. The price of crude oil in the world market on Thursday was at US$108 per barrel.
Officials said that if the price of fuel went above 11,000 kip per litre it would trigger increases in the prices of other commodities, as fuel is an essential component in the production and transport of goods.
Bus operators have said they will put prices up if the price of petrol hits 11,000 kip per litre.
Laos has experienced rising inflation since the end of last year, with food and fuel prices the main driving forces. Increases in food prices have occurred due to insufficient supply of agricultural products after many areas in the country were affected by weather extremes in recent times.
Prices for various goods, including food and cement, have risen despite the government saying it had not given permission for such increases.
Dr Nam said the government would do its best to stabilise the price of goods in an effort to protect consumers. However, he said the price of goods in Laos should be similar to those of other countries as lower prices would cause an outflow of goods and lead to long-term negative impacts.
vientiane times
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