Petrol sets new record

HA NOI — After several months of trying to stabilise petrol prices the Ministry of Finance yesterday announced an unexpected rise of VND4,500 per litre, the highest increase so far.

This is the second increase in petrol prices this year. The first was on February 25, which saw the price rise from VND13,000 to VND14,500.

During the press conference yesterday, Minister of Finance Vu Van Ninh announced that a jump of 31 per cent in the price of A92 gasoline, setting a new record of VND19,000 per litre.

The ministry also decided to increase the prices of diesel and kerosene by VND2,000 and VND6,100 per litre to VND15,950 and VND20,000 per litre, respectively.

"The increase is necessary as the prices of oil worldwide have been rising since the beginning of the year, putting a heavier burden on the State’s budget as well as on local petrol businesses," said Ninh.

In the first six months of the year, domestic oil and petrol enterprises suffered a loss of VND14.5 trillion (US$878ˆmillion) despite the commodities’ import tax of 0 per cent.

The world oil price in the second half of the year would be hard to maintain at average levels of $139.7 per barrel in the first 17 days of July. It was predicted to reach $145 per barrel in the third quarter of the year and $155 per barrel in the fourth quarter.

If domestic oil and petrol prices were kept at the current level in the last six months of the year, petrol businesses would suffer a loss between VND67 trillion ($4 billion) to VND72 trillion ($4.4 billion), and the State budget would face many difficulties because projected revenue from crude oil was only VND40 trillion ($2.4 billion), not enough to compensate for the loss, the minister said.

If partial adjustments were not made to the price this year, it would place heavy pressures on the management of oil and petrol price next year, which would have a domino effect on management of other commodities’ prices. Furthermore, it would not encourage oil and petrol users to save on the energy source.

Oil smuggling through the border is still proving difficult to control because the current price in Viet Nam is still VND7,000-8,000 lower than that in Cambodia, making it necessary to adjust prices.

"As the country integrates itself into the world economy, we have to manage oil and petrol prices in line with the market mechanism. We do not have the ability to separate the domestic price system from that of the world market as we still have to import 100 per cent of oil and petroleum products," Ninh said.

Shopping to be costlier

Minister Ninh admitted that this price hike would have a negative impact on the country’s production, especially on industries which use a large amount of petroleum products.

The minister estimated that the petrol price increase would push up the consumer price index from now to the end of the year by between 0.5 and 0.7 per cent.

Nguyen Thi Mai Chi who works for a bank in Ha Noi said that "the increase will affect my five-member family’s spending but I cannot cut any expense as all of it is necessary.

"I am very worried because both my husband and brother work far from home and our petrol costs will be much higher now."

Chairman of the Ha Noi Taxi Association Do Quoc Binh said, "With the 31 per cent increase in the petrol price, the prices of spare parts and services will also rise by between 30 and 50 per cent. A taxi company will suffer an average loss of VND4 million per car, per month. The loss is huge for companies that have a fleet of 20 or 30 cars," he said.

"Taxi companies will not be able to withstand the losses for a long period and will have to raise their charges as well. The increase could range from VND1,000 to VND1,500 per kilometre.

"However, I think that the increase, if any, will only be due to effects of input costs so passengers should sympathise with them."

Save energy

Speaking at the conference yesterday, Deputy Prime Minister Hoang Trung Hai called on people to save energy in light of the current difficult situation.

He added that despite the increase in petrol prises, the Government was still committed to controlling inflation and saw that as its top priority.

Saving energy requires the efforts of all authorities, enterprises and individuals. "We have to think of common interests," Hai said.

Minister of Industry and Commerce Vu Huy Hoang said, "Last year, the country consumed 13.9 million tonnes of petroleum products worth $7.71 billion while in the first six months of the year, we imported $7.87 million tonnes valued at $6.83 billion. The consumption volume is expected to be 15 million tonnes by the end of the year."

The Government plans to build a nationwide crude oil and petroleum product reservation system in a bid to ensure the country’s energy resources in case of fluctuation in the world oil supply, Hoang said.

The ministries also called on enterprises to adopt thrifty practises and petrol businesses to increase their reservation themselves.

‘A real shock’

Filling stations were overcrowded with large numbers of customers yesterday morning, anticipating a price hike in petrol.

A seller at a filling station on Xo Viet Nghe Tinh Street in Binh Thanh District said the number of customers was three times higher than normal.

Many of the motorbike drivers had read about the fuel hike on on the internet earlier in the day, he said.

"This is really a shock as officials said on TV just a few days ago that there would be no increase in petrol. I was so surprised to hear petrol station staff tell me that I had to pay VND100,000 instead of VND70,000 as usual to get my tank filled," said Nguyen Ngoc Hoa, 27, who works at HT Mobile Communication Centre.

"I’m so worried. How can we survive these prices with a new baby?" she said.

Some consumers, like Nguyen Trung Chinh, 26, of HCM City, are thinking about buying a bicycle again.

"Buying a bicycle is a good option for the current situation. It protects the environment and my pocket as well," he said.

Le Ngoc Dang, an architect at HTA + Pizzini in HCM City, was also upset about the hike, saying the Government should have set incremental prices rather than a sudden big increase.

Like HCM City, hundreds of customers gathered at filling stations in the central city of Da Nang, including Total on Nguyen Chi Thanh Street, Petrolimex on Trung Nu Vuong Street, and Station No. 3 on Quang Trung Street.

Sellers at the filling stations supplied fuel to motorcyclists and drivers of vehicles and refused to sell petrol to those who brought canisters to fill.

Le Van Hanh, owner of a fishing boat in Da Nang’s Thanh Khe District, said he might have to cease fishing because of the higher price of diesel, VND15,950 per litre.

When diesel jumped to VND13,950 per litre in February, he stopped fishing.

In June the government stepped in to help fishermen and Hanh resumed work.

Despite the fuel price hike, smugglers continue to illegally export fuel from Viet Nam to Cambodia through the southwestern border, especially through An Giang Province’s An Phu and Tinh Bien districts.

Nguyen Van Tuyen, a resident in An Phu District’s Khanh An Commune, said although prices of petrol increased to VND19,000 per litre and diesel oil to VND15,950 per litre, they are still VND3,000 to VND3,500 lower per litre than prices in Cambodia.

He said petrol was selling for VND23,253 and diesel oil for VND23,590 per litre in Cambodia — VNS

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