As expected, key petrol importers have decided to raise the petrol retail price by VND800 per litre, commencing from 0 am May 7.
With the price increases, A92 petrol is now selling at VND11,800/litre, A90 at VND11,600/litre, and A83 at VND11,400/litre. Meanwhile, kerosene, mazut and diesel prices remain unchanged as the State still keeps subsidization over these products.
In fact, people had heard about the price increase one day before the decision came into effect as the information had leaked out. Guessing about the price increases, sales agents tried to store up a big volume of petrol to make profit when the price increases. The Ministries of Finance and Trade had to set up a supervision board which is responsible for preventing from petrol speculation.
The information leaking had caused a headache to petrol importers and state management authorities. On the evening of May 6, the ministries and key petrol importers gathered to reconsider the time for petrol price increase. Several solutions were considered: either raising the retail prices sooner than previously planned (0 am May 7), or delaying the price increase plan for several days, so that speculators cannot make profit.
However, the ministries finally decided to raise the retail price as of May 7 as initially planned. Officials said that no one could buy petrol in big volume as a speculation thanks to the strict supervision over the petrol distribution.
What worries the ministries now not the speculation any more, but the possible big increase of the consumer price index (CPI) in May 2007.
A source said that key petrol importers previously asked for the price increase of VND1,000 per litre, however, their proposals were not accepted by the ministries.
The high CPI in May 2007 proves to be unavoidable, and at the recent meeting of the Taskforce on Domestic Market Management, officials also predicted that the petrol price hike would lead to the sharp price increases in May.
Nguyen Van Sang, Deputy Director of the Domestic Market Policy Department under the Ministry of Trade, said that since May 1, 2007, petrol traders have the right to define the selling prices as stipulated by the Decree 55. The Ministries of Trade and Finance have the right to intervene the market only when they find out the signs of unreasonable price increases.
Mr Sang said that the petrol price increase at this moment would certainly lead to the price increases of a lot of other goods and services. The CPI in April increased by 0.49% over March, making the CPI increase by 3.52% in the first four months of the year. The transport and postal services saw the biggest price increase in April, 1.05%, while other groups of goods and services saw the price increases of between 0.17% and 0.48%.
As the world’s petrol price keeps increasing, domestic petrol importers have been suffering from loss for the last two months. The Government has decided to lower the import tax from 10% to 5% on April 28, but the tax reduction proves to be not enough to cover the importers’ loss.
Fuel tax cut to limit price hike impacts
The Ministry of Finance has cut import tariffs on gasoline from 10 to 5% in a bid to limit any rise in pump prices as the Government's new energy policy takes effect.
Starting yesterday, retailers for the first time will determine prices on octane 95 and 93 gasoline. The move is part of the Government's April 6 decree to slowly remove fuel subsidies over the next two years.
The decision to reduce import tariffs, which took effect last Saturday, will help curb any short term price hikes, says the ministry, though companies are still reporting VND300-VND500 losses for every litre of petrol sold.
Trade Minister Truong Dinh Tuyen vowed during an online press conference two weeks ago that petrol prices would be kept under VND12,000 a litre this year.
Petrol price in several neighbouring countries has risen to VND14,000-15,000 a litre, but if applied to Vietnam consumers would find it difficult to afford, said Tuyen.
Hence, the ministry is willing to cut import tariffs to zero if global crude prices increase unexpectedly.
If companies continue to report losses after tariffs are reduced to nothing, the Government may even re-institute fuel subsidies to keep pump prices low, said Tuyen.
Officials have established a vague time line for liberalising fuel prices - yesterday, companies took full control of octane 95 and 93, later this year they will determine the cost of heavy oil, and in 2008 diesel.
The exact dates for removing heavy oil and diesel subsidies will be decided by the prime minister, said Tuyen. The Government has also created a special group to monitor prices arid police the market.
World oil prices fell on Monday on profit-taking after sharp gains last week following news of a possible terrorist plot in Saudi Arabia, said analysts.
In London, Brent crude for June delivery fell US$0.52 to $67.89 a barrel on Monday, while on the New York Mercantile Exchange light sweet crude slid $0.55 to $65.91 a barrel.
PetroVietnam seeks active presence in South America
PetroVietnam wished to set up a long-term and reliable cooperation with Energia Argentina S.A. (ENARSA) not only in oil and gas exploration and exploitation in Argentina, but also in relevant services in a third country, said a PetroVietnam official.
Dinh La Thang, President of Board of Directors of PetroVietnam - the National Oil and Gas Group - made the affirmation while working with ENARSA during his visit to Argentina from April 22-24 to seek for cooperation opportunities in Argentina and expand investment in the Southern American market.
ENARSA Director Jorge Haiek expressed his hope for a joint venture with PetroVietnam in oil and gas exploration and exploitation off shore Argentina.
The two companies exchanged a draft memorandum of understanding on bilateral cooperation, saying they would make all efforts for a quick signing to create a foundation for a long-term partnership.
While in Argentina, PetroVietnam officials met with Argentinean State Secretary in charge of Energy under the Ministry of Planning, Investment and Services Daniel Cameron, who said that the Argentinean Government always create favourable conditions for PetroVietnam in Argentina as well as its partnership with ENARSA.
