Petrolimex said it had not yet increased petrol prices as much as permitted, despite two price increases in more than one month that experts have said exceeded imported fuel price increases.
Petrol companies blamed the rise on more expensive imported petrol and the rise of the US dollar against the dong.
Since Decree 84, a new mechanism for petrol and oil trade, was effected on December 15, 2009, letting suppliers adjust petrol and oil prices, the retail price of A92 petrol has increased twice by VND1,040 to 16,990 per liter. Meanwhile, the price of petrol imported from Singapore only rose by about VND400 per liter.
“The recent increase is just 75 percent of the rate we can increase under the State’s regulations, since we must consider the impact on consumers,” said Vuong Thai Dung, deputy general director of Vietnam National Petroleum Corporation (Petrolimex).
“The increase is reasonable compared to the developments of the world petrol market,” he added.
One of the two reasons for the rise was the price of petrol on the world market has increased, many petrol companies said.
But some experts argued that since January 14, when the domestic petrol price increased by VND450 per liter, the imported petrol price has only risen by less than US$1 to $82-82.5 per barrel, so the rise in domestic price is higher.
The second reason is that the price of US dollar has increased by about VND600 since February 10, pushing the imported price up, petrol companies said.
However, experts in the business pointed out that the rise in the value of US dollar against dong only explained a VND400 rise per liter.
A director of a petrol and oil company recognized: “In fact, it was not high time to increase the petrol price by VND590 per liter on February 21. At the current discount offering to agents, we still get a profit of VND100 per liter.”
“Only when the price of imported petrol rises to $85 per barrel will we suffer a loss of about VND200 per liter,” the director said.
In response to queries about the sudden hike, Ms. Nguyen Thanh Huong, deputy head of the Price Management Department of the Finance Ministry, said the rise is reasonable and lawful.
The Petrol and Oil Prices Stabilization Fund could not have been used to prevent such a rise, since Decree 84 stipulates that only when the price of petrol and oil surges by 7 percent can the fund be used to offset losses suffered by companies.
The recent rise in petrol price was just 3 percent, and petrol businesses had the right to increase the price without having to get permission from the Government,” she explained.
