The Ministry of Finance on Nov. 22 announced an unexpected hike in the petrol retail price by 1,700 VND per litre after spending several months trying to keep price of the commodity stable.
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The Ministry of Finance on Nov. 22 announced an unexpected hike in the petrol retail price by 1,700 VND per litre after spending several months trying to keep price of the commodity stable.
Addressing a press conference, Deputy Finance Minister Tran Van Ta said the price of A92 gasoline surged to 13,000 VND from 11,300 VND per litre as of
Ta said the finance ministry also decided on an increase of 2,500 VND per litre of mazut, from 6,000 VND to 8,500 VND per litre. The increases for diesel and kerosene were 1,500 and 1,600 VND, respectively.
The move was made as volatile petrol prices on the world market have shot to record heights, nearing 100 USD per barrel.
It was the first price increase for mazut, kerosene and diesel since 2006. Although this marked the third price hike for petrol so far this year, the previous two increments of increase were lower, at 900 VND and 800 VND, respectively.
“The increase this time is unavoidable, as the world petrol price has risen sharply since October, placing a heavier burden on the State’s budget as well as on local petrol businesses,” said Ta.
Due to the skyrocketing price of oil on the world market, Ta estimated that the State would have to spend roughly 1.1 trillion VND to hold petrol prices in place for all of 2007. The cost of stabilisation for diesel, mazut and kerosene was roughly 12.3 trillion VND.
Ta admitted that the coming petroleum price hike would have a negative impact on the country’s production, especially on industries, which use a significant amount of petroleum products.
The finance ministry estimated that the petrol price increase would push up the average cost of industrial inputs by between 0.11 and 10.8 percent.
Chairman of the Viet Nam Transport Association, Nguyen Manh Hung, also worried that transport businesses would have to raise their freight charges, as the costs of petroleum products account for up to 50 percent of their total transport costs.
“This petroleum price hike of roughly 20 percent will make a strong impact on the transport industry, as it will push up transport costs by more than 10 percent,” Hung said.
However, Hung said that transport businesses would have to remain cautious in applying their price hikes, as competition in the industry was considerably fierce.
Individual consumers were also concerned that they might suffer from the petrol price hike, fearing that the increase would have a domino effect on the costs of other commodities and services.
However, Ta expected the change would not derail the country’s target to keep the consumer price index (CPI) under the GDP growth rate of 8.5 percent, explaining that only transport, which is among the ten commodities and services used to calculate the country’s CPI, is directly affected by the petrol price hike
(Source: VNA)
