Fuel prices to go up by VND1,000 per litre

Seven local petroleum wholesalers have submitted their plans to increase the prices, said Nguyen Tien Thoa, head of the Price Management Department under the Ministry of Finance.

They include the Vietnam National Petroleum Corp (Petrolimex), Saigon Petro Co Ltd, Dong Thap Petroleum Trading Co (Petimex), Thanh Le Petroleum Co, Nam Viet Petroleum Co, and Petex Petroleum Co.

"The registered price increases, ranging from VND900 to VND1,100 per litre, are in line with the ministry’s latest calculations, " Thoa said.

The reason for the price hike is that imported petroleum prices have risen sharply within the last 30 days. The average price of A92 gasoline is currently $114 per barrel.

On late Tuesday afternoon, Nguyen Tien Thoa told Tuoi Tre that the ministry had received the price hike plans of four major petroleum businesses.

But the ministry refused to offer Tuoi Tre the proposed price increase range and the name of the four petroleum wholesalers who suggested it.

Thoa said although those petroleum companies are allowed to suggest the local retail prices according to world market signals, the price increase decision is still under state control so that it will not have any negative impact on local consumers.

The prices of petroleum products on world markets over the past 10 days, after the price adjustment on July 20, are still high.

The ministry is closely monitoring the prices in order to take appropriate and timely measures, Thoa said.

If world oil prices continue to rise higher than the current levels, the ministry will consider stopping the deduction of the retail price to feed the petroleum price stabilisation fund. The fund will then be deployed to partially subsidise prices.

"Depending on the global and local situation, the state will operate flexibly by synchronising the use pricing policies, taxes, and the price stabilisation fund to stabilise oil prices, contributing to macroeconomic stability and controlling inflation," Thoa added.

Predictable move

VietCapital Securities Joint Stock Co on Monday told their investors in a report that gasoline prices may see their second increase this month in the next few days, based on its own calculation.

The current 30-day-average price of M92 has been lifted to about VND22,000 per litre, or VND1,000 (4.8 per cent) higher than the current retail price of VND21,000 per litre, based on Bloomberg data.

“However, we expect the Ministry of Finance may also consider lowering the import tax rate by 2 per cent to 10 per cent to support businesses and the overall economy; thus the new retail price could be lower, at around VND21,600 per litre,” it said.

The last upward price adjustment was on July 20, thus satisfying the minimum length of 10 days between consecutive price increases by the government.

“As gasoline is still on an uptrend and closed at $115.1 per barrel on July 27, we believe that the 30-day-average price of M92 Singapore will continue to rise and may soon reach a two-month high of $113 per barrel in the next two weeks, equivalent to VND22,800 per litre at the current import tax rate of 12 per cent.”

“The rise in gasoline prices may have some negative effect on the transportation basket, but its impact on the overall CPI would be rather small as consumer prices have seen negative figure in the past two months.”