>> Minister: Transparency needed in calculation of petrol prices
>> Fears of inflation stirred by latest petrol price hike
>> Petroleum prices hit record highs in Vietnam
Consumers have been left disappointed by a meagre decrease of VND300-VND500/litre for petrol products on August 26, with complaints of profiteering being levelled at petrol distributors and retailers.
Vietnamese consumers disappointed with recent petrol price cut
Industry experts said that price cut from VND21,300 per litre to VND20,800 (USD1.02-USD0.9) should have made earlier if petrol price calculations had been more transparent.
Domestic petrol prices have long been subsidised through a price stabilisation fund that cushioned domestic prices from varying global prices being fed into the domestic market. When world prices were high, the government subsidised petrol prices, and when international prices declined, the Ministry of Finance demanded a reduction of financial assistance from the Price Stabilisation Fund for petroleum products from VND400 per litre to VND300 per litre to replenish the fund. Yet since global prices began a general decline since June, domestic consumers are wondering why they are still paying high prices.
Modest price cut
Consumers have been unimpressed by the Ministry of Finance’s recent decision to lower petrol prices by just VND300-VND500 per litre.
Many people said that there had been a sharp price hike matching price rises in the world market, yet when there were declines, the domestic price had only seen a late and meagre cut.
The domestic market has recorded two petrol price hikes since the beginning of this year. The first on February 24, increasing octane 92 petrol by VND2,900 (USD0.13) per litre and diesel by VND3,550 (USD0.17) per litre, and the second adding an additional VND2,000-VND2,800 (USD0.09) –USD0.13) per litre on March 29.
Ambiguous pricing
Petrol experts said it was inaccurate to decide pricing solely based on average imported prices on the Singaporean market, instead of wholesaler imported prices.
Many petroleum traders have admitted that they had been wise enough not to buy large amounts of petrol when prices had been high.
According to the General Department of Vietnam Customs, In June when the price of imported diesel fell sharply, domestic traders imported up to 564,843 tonnes in total. When the imported prices rose in July, they just imported only 203,000 tonnes.
However, Dang Vinh Sang, Ho Chi Minh City\'s One-Member Limited Liability Petroleum Company Limited (Saigon Petro) said in order to apply the price cut under the Ministry of Finance’s guidance, the company had to slash commissions for its agents by VND400 per litre of octane 92 petrol.
The ministry stipulates that decisions on pricing should be made based on changes in the average imported prices in the Singaporean market over the past 30 days. However, experts said that the mechanism was irrational as makes the average price always higher than the domestic selling price and fosters price hikes.
Consumer rights ignored
Ngo Tri Long, Former Deputy Director of Institute for Scientific Research, Market and Price (ISRMP), said petroleum price decreases are indispensable. The domestic market could see more price decreases based on falls in the imported prices if the country applies a flexible market regulation mechanism, instead of current rigid calculation of average imported prices over the past 30 days.
There were times in June and in early August when domestic prices could have been lowered, but no price cut was applied, Long emphasised.
He noted that the current petrol price regulation mechanism is not transparent. Traders’ profits or losses should be calculated based on their real imported prices, instead of the average imported prices over the past 30 days.
