Two petrol wholesalers yesterday proposed another rise in prices to the Ministry of Finance, which would see a VND1,200 (USD0.06) increase per litre.
The Ministry of Finance will carefully review the proposed prices
Head of the Ministry of Finance's Price Management Department Nguyen Tien Thoa said he has just received the proposal from Dong Thap Petroleum Trading Company (PETIMEX) and Petec Trading and Investment Corporation.
The reason for the hike is because of a surge in prices in Singapore, the biggest fuel supply market for Vietnamese enterprises. In August 22, A92 fuel was sold at USD125.35 per barrel and kerosene stood at USD131.97 per barrel. In August 13, global world petrol and kerosene prices were valued at USD115 and USD123 per barrel. However their prices have increased to USD121 and USD127.
According to the traders, retail prices are actually lower than the basic price VND1,100 per litre, with kerosene VND700 per litre lower. In the last ten days, they claimed they incurred losses of VND2,000 per litre and VND1,500 per litre on petrol and kerosene respectively.
The wholesalers said their business cycle is now based on 10 to 20 days, unlike 30 days previously. That's why they have been hit by big losses and will have to raise the prices if they aren't supported.
However, Thoa said the ministry would have to carefully examine the proposed prices before reaching any decision.
If the proposal were accepted, this would be the third petrol price rise since August 1, marking a VND3,000 per litre increase and five hike since early this year.
Experts have commented on the number of taxes and fees on petrol. Consumers pay VND6,000-8,000 on every litre of petrol, including import taxes, VAT, environment taxes or the price stabilisation fund fee. The Ministry of Finance should reduce import taxes to lessen the effects of the increased prices. If the government lowered import taxes to 0% like in early 2012, the basic price would be reduced by VND1,950 per litre.
To keep the current price, experts proposed to lower the import tax for A92 fuel from 12% to 5%, which would allow a VND1,150 reduction per litre.
Thoa said the Ministry of Finance will look into it. However, the current taxes are also lower than required. For example, the petrol import tax stood previously at 20% but was currently at 12%. Taxes for diesel, kerosene and mazut should be 15%, 20% and 15% but the ministry had already lowered them to 10% and 12%.