Ministry announces petroleum products’ price hike

Accordingly, the price hike is applied for A92/A95 premium gasoline, 0.05S diesel, kerosene, and heavy oil, said the Document No.143 dating March 7, 2012.

The new prices for the 4 petroleum products are VND22,900 per liter, VND21,400 per liter, 20,800 per liter and VND18,800 per kilogram, a respective rise of 10.1 per cent, 4.9 per cent, 3 per cent and 11.2 per cent.

This is the first price increase of petroleum products’ in 2012.

It has also asked petroleum wholesalers to significantly reduce the extraction of the national petroleum price stabilization fund for their own.

Previously, they can take VND1,400, VND1,2340, VND780 and VND1,610 per every liter/kilogram of A92/A95 premium gasoline, 0.05S diesel, kerosene, and heavy oil sold from the fund.

They can now take only VND300 per every liter/kilogram of those petroleum products sold.

The move is expected to refill the fund that is drying out.

Finance Deputy Minister Vu Thi Mai yesterday said the local prices of those petroleum products are some VND2,000 a liter lower than the basis price used to calculate the local retail prices.

If the import tax exemption and the extraction of the stabilization fund still cannot cover the losses suffered by petroleum wholesalers, the only solution is a price hike, she told the regular press meeting at the government office in Hanoi.

The ministry late last month exempted all the import taxes levied on those products.

Still a big gap

The average world prices of petroleum products, including gasoline, diesel, kerosene, and heavy oil, rose about 7 per cent, 9.7 per cent, 8.56 per cent and 12.8 per cent against the basis prices used for the latest price adjustment on October 11, 2011, the ministry said.

The world prices have recently surged to their 9-month high.

As a result, though the ministry has deployed many tools in an attempt to stabilize the prices, local retail prices are still some VND4,313-8,387 a liter/kilogram lagging behind their regional counterparts.

If all the costs and fees are included, the price hike must range from VND4,200-6,500 a liter/kilogram for those petroleum products.

Therefore, the price hike just meets up 12.56 per cent-40.95 per cent the real prices, said the ministry.

The import tax cut for some petroleum products late last month has resulted in a VND4 trillion loss for the state budget, said the ministry.

The state budget last year suffered a VND11 trillion loss from subsidizing the prices for those petroleum products.

The prices of those products rose 2 times and reduced 2 times last year.

The last price hike happened about a year ago when the ministry raised the retail prices by VND2,000-2,800 per liter/kilogram on March 29, 2011.

In a Monday meeting held by the Ministry of Industry and Trade, Vo Van Quyen, head of Domestic Market Department, said the time for the future hike was still uncertain.

It might take place in March or April, depending on future meetings to discuss economic scenarios for the local market.

“The price hike will fire up inflation, but without it petroleum wholesalers cannot withstand their losses, so a roadmap and different tools for it should be planned very carefully,” he said.

On international market, oil prices have undergone a five-week gain in a row due to the tensions between Iran and Western world.

The climax of the rally took place last week when the Brent oil price surged to its highest level since July 2008, reaching $128, after Iranian media broadcast a report on a fire of an oil pipeline in Saudi Arabia.

The market has recently been softened with Brent oil price and crude oil hovering around $122 a barrel, and $105.10 a barrel.

In the US, average gasoline prices across the country had increased for 26 consecutive days as of last Sunday, reaching $ 3.76 a gallon, or $ 0.993 per liter (equivalent to VND20,720 per liter).