Gas prices surge, fuel prices to follow suit

August 02, 2012 | 09:51
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Cooking gas retail prices will pick up by more than VND50,000 per 12-kilo container on Wednesday after four months of constant price drops, while fuel wholesalers have proposed a price hike.

According to cooking gas wholesalers, Saudi Arabian Oil Company (Saudi Aramco) as one of the world’s key gas suppliers has quoted the August contract price at $775 per ton, up $177.5 against July.

Therefore, local retail prices are raised by an average VND4,333 each kilo. Accordingly, a 12-kilo container of cooking gas mark up VND52,000 to VND367,000-370,000 on Wednesday.

Le Thi Minh Man, deputy general director of Saigon Petro, known for SP Gas, said the contract price had risen too sharply this month although it was not winter yet. “Petrol and gas prices now go up and down without any rule as there are many influential factors,” said she.

Given the price spike, gas consumption in August might be affected, said representatives of many wholesalers.

The fact that cooking gas prices would shoot up in August was foreseen in early July. As such, sales agents scaled up their stockpiles to enjoy the price differences.

In late July, wholesalers restricted the gas volumes allocated to sale agents and raised wholesale prices by VND10,000 per container, while retail prices remained unchanged.

In related news, fuel wholesalers have sent their petition to the Ministry of Finance, seeking a fuel price hike of VND500-900 per liter. So far, the ministry has yet to give its reply.

Another price increase in the local fuel market is inevitable, as the finance ministry in late June permitted wholesalers to determine prices in accordance with the margin and the frequency regulated in the Government’s Decree 84 on fuel trading.

This allows enterprises to revise prices when the basic prices pick up less than 7 per cent and the minimum time between two adjustments is ten days. However, every price cut and hike must be registered with the finance ministry.

The finance ministry has constantly stated it would maintain its control even when the right to determine prices was transferred to wholesalers.

Enterprises must calculate prices based on the method and the principles formed by the state. The state will directly intervene when there is strong volatility.

Regarding the latest price hike on July 20, the finance ministry said enterprises had registered an increase level of VND500-600 per litre. However, the ministry pinpointed the gap between the base prices and the current prices was some VND400 a litre at most, so this figure was the final increase level.

SaigonTimes

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