Still Puzzling to Fix Petroleum Prices

After the decree became effective, petroleum prices have fluctuated among distributors, which are seen as the first factor to show the normal circulation of petroleum market.

 

Currently, a number of petroleum traders such as PV Oil, the Military Petroleum Company and Song Hong Tourism Ltd. Co have reduced their petrol selling prices lower than Petrolimex’s levels which provides up to 60 per cent of petroleum volume for the domestic market. Despite being fixed at lower prices, the disparity in petroleum selling prices is at just VND40-VND50 per litre, not leading to a competition among the traders.

 

At a press conference held by the government office early March, Head of the Central Finance Administration Committee Le Duc Thuy, said the increase in petrol prices with “a dense density” can result in a pressure for inflation risk. He added that the local government has proposed concerned ministries and agencies to reconsider petroleum regulating mechanism to ensure market principles. However, they have to pay attention to the density of the price adjustment and the levels.

 

Recently, prices of finished crude oil and petrol in the world fell at only US$70/barrel, but domestic businesses have still raised petroleum prices, not adjustment them in line with the world market. Besides, the Ministry of Finance issued an import tax mechanism of these products. Accordingly, with high crude oil prices, petroleum importers will enjoy tax reduction. Economist estimated that, with the world petroleum increase earlier and the tax reduction, Vietnamese enterprises only need to raise by VND400 per litre of petrol to make profit, but in fact they increased by up to VND560.

To answer the public doubts, representatives from petroleum traders said they comply with calculating formulas of the decree in which retail prices are calculated based on CIF, import tax, special consumption tax, forex exchange rate, VAT, petroleum fees, other taxes, business costs and profit.

 

Bui Ngoc Bao, General Director of Petrolimex explained that the opinion of Petrolimex’s petroleum price hike but small reduction is wrong as the company had to wait for 38 days before deciding the price increase in the context of the rise in import. While, according to the decree 84, the time is only 10 days.

 

Speaking at the meeting, Deputy Minister of Industry and Trade Nguyen Cam Tu denied the information that petroleum businesses took advantages of fixing prices under the decree for the unreasonable rise to make high profit.

 

Representatives from companies and management agencies said that the most important thing here is ineffectiveness of petroleum price control under the decree.

 

Deputy Minister Tu added that his ministry has strictly supervised price adjustment and affirmed that “They are following the decree 84 appropriately, but their price increase time was not suitable. It fell on the 8^th of the Tet Holiday when people have just welcomed Tet and then got bad news about the raised petroleum prices. Therefore, they showed their strong response, which is very easy to understand”.

 

Vo Van Quyen, Deputy Head of the Domestic Market Policy Department under the Ministry of Industry and Trade said no wrongdoings in enterprises’ petroleum price fixing have been found. Moreover, some papers still showed the traders’ losses.