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Year-to-date 30% hike in gasoline price reasonable: Vietnam minister

Thursday, May 28, 2015, 18:06 GMT+7
Year-to-date 30% hike in gasoline price reasonable: Vietnam minister

A 30-percent rise in local gasoline prices in the year to date is reasonable because the global oil price has surged 38 percent since February, Vietnamese Minister Finance Dinh Tien Dung said during a recent TV program. The ministries of finance and trade-industry last Wednesday gave the green light to the second gasoline price hike in May with a six percent rise, bringing the retail gasoline price in Vietnam to VND20,100-21,030 per liter. With the latest price increase, the second consecutive price hike this month and the third since the beginning of the year, current gasoline prices have gone up over 30 percent, or around VND4,800 per liter, so far this year. The recent adjustment in fuel prices in Vietnam matches the fluctuations of global prices, Minister Dung said during the “People Ask – Ministers Answer” TV program, which was aired by national broadcaster Vietnam Television (VTV) on Sunday evening. As of May 21, the world oil price was at US$60.72 a barrel, up more than 38 percent compared to the lowest price, at $43.9 per barrel, in February. "Meanwhile, the domestic retail price only increased by 30 percent, so we believe that this hike is justified," the head of the finance ministry said. Regarding the increase in environmental tax on gasoline, from VND1,000 to VND3,000 per liter, Minister Dung said that this is not the main reason why gas prices have risen so sharply recently since the import duty on gasoline also went down during the period, from 35 percent to 20 percent. "According to our calculations, the import tariff reduction is larger than the environmental tax increase," he said. In 2014 and the first months of 2015, gasoline prices were complicated and unpredictable. In the first half of 2014, prices fluctuated at a high level, and began to go down in July 2014. Global petroleum prices plummeted from September 2014 to January 2015, but started to rise again in February, he said. To cope with the global oil price movements, the Ministry of Finance said that retail gasoline prices should be managed in harmony with international prices and the socio-economic situation of the country, Minister Dung said. As a result, when the input costs go down, the price will decline, but when the prices need to be stabilized given a global price increase, the ministry will use other tools like reducing import duties, using the stabilization fund or raising quotes in order to maintain the government’s inflation target and macroeconomic stability, he added. Meanwhile, Vu Huy Hoang, Minister of Industry and Trade, told news website VnExpress that the effect of the environmental tax increase and the import tariff cut is minimal. “The adjustments were carefully calculated. I am fully responsible for them,” he said. Regarding oil products, consumers have benefited even more than before the tax adjustment. Specifically, the price of diesel dropped VND2,300 dong per liter, while the prices of kerosene and fuel oil dropped from VND500-1,000 per liter depending on the type, he said. “The domestic retail price increase was due to world oil price increases only,” he said. In the last few days global oil prices have gone down, but the price has already risen when calculated for the period of 15 days ending on May 19, Minister Hoang said. Regarding world oil prices, people must speak of the petroleum products in the Singaporean market. Petroleum products are generally 30 percent more expensive than crude oil. If crude oil costs $60 per barrel, petroleum products will be about $80 per barrel, Minister Hoang added.

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