Le Thu Ha, an engineer at Ha Noi Beer, last week made the bimonthly trip, like many other city dwellers, to purchase another canister of gas for her home, but was met with an unwelcome surprise.
A market wide price hike on cooking gas last week has caused some trepidation among consumers, though companies maintain the increase was necessary.
Households across Viet Nam still depend on liquid petroleum gas, or cooking gas, which makes the monthly canister purchases a near necessity.
Ha eventually bought her usual canister of Petrolimex for an unusual price of VND213,000 (US$13.30), but not before asking the shop owner if other brands were selling for any less. She was amazed to find they were not.
Companies buy their gas from various sources so there should be some discrepancy in prices, says Ha who speculates possible collusion among distributors in order to control the market.
"Last month, the price increased [to VND183,000 ($11.40) a canister], and then it rose again after another month," says Nguyen Thanh Phuc, another Petrolimex customer. "Prices on the global market surely could not have risen as much as it has in Viet Nam. My guess is that the gas companies themselves increased the price in order to earn more profit."
According to a Petrolimex official though, the June price hike in the domestic market was indeed due to rising costs in the world market.
Gas prices stand at around $60 a tonne, said the Petrolimex official, up from $40 a tonne. Tran Trung Chinh, a manager at VT Gas Co, says competition is maintained, but it is the big players like Saigon Petro, which has a 20 per cent stake in the market, that really set prices. Smaller retailers simply follow their lead in order to stay competitive.
Even though, Viet Nam is a net exporter of energy commodities, supply factors are a concern for many companies.
The Dinh Co factory, a State-owned company that supplies the majority of local retailers, produces enough gas to satisfy 40 per cent of market demand; the rest is imported.
Fluctuations on the domestic market are, therefore, not absolutely dependant on global prices, says Bui Minh Tien, deputy director of Gas Producing and Trading Company, but still an important factor in the calculation.
Though consumers have been hurt by rising prices in more areas than just gas over the past few months, restaurants are at a greater risk. Hotel managers around the capital say restaurants prepare for such uncertainties, but menu prices will likely rise due to the three gas price hikes this year.
With consumers already tightening their belts due to overall economic inflation, "it’s going to take a long time for us to persuade our restaurant customers to come again," says a Daewoo Hotel representative.
