Petrol companies accused of profiteering from price stabilisation fund
  • | | March 29, 2013 03:42 PM

The Ministry of Finance (MoF) and the Ministry of Industry and Trade have allowed petrol prices to increase by VND1,430 per litre (USD0.07) because the price stabilisation fund is exhausted.


 Vietnamese fuel consumers pay more as global prices decrease

The price for diesel fuel has also increased by VND362 per litre. In addition, kerosene has risen VND480 and mazut by VND807 per litre.

"The Price Stabilisation Fund is running empty while neighboring countries' prices are up by VND2,000 to 5,000 per litre," according to the MoF.

The decision came as a shock to consumers who perceived that global oil prices were decreasing. However, MoF stated that the long-term trend for fuel is increasing from late 2012 to early 2013. In order to set off this price increase the government used the price stabilisation fund, subsidising petrol retailers VND2,000 per litre, while kerosene and diesel sellers received VND1,150 and VND 800 more per litre respectively.

Since December 15, 2012, fuel consumers have been taxed VND300 per litre at the pump to support the price stabilisation fund in order to offset the volatility of world oil prices. The fund was set up to compensate private fuel sales outlets for any losses incurred by the gap between international and domestic prices.

However consumers have been raising complaints about the lack of transparency of the fund.

Many have accused the MoF of allowing enterprises to continue using the stabilisation fund while the oil prices were on the decline.

Phap luat Thanh pho HCM (HCM City Law) newspaper reported that the average world price over a 30-day period for A92 sharply decreased, reducing the enterprises' losses to VND1,000 per litre while their compensation from the fund reached VND2,000 per litre. Estimated losses for kerosene were VND300 per litre over the same period, while the MoF allowed compensation of VND1,150 per litre.

Some economists, however, have criticised the price stabilisation fund, even going so far as to say that it was stealing money from consumers. Economist Nguyen Minh Phong said, "The fund threatens the transparency of fuel prices."

Nguyen Tien Thoa, former Head of the Price Management Department at the Ministry of Finance said that the fund had been used by petrol wholesalers to increase commissions to retailers, a cause of worry among many in the retail market.

"The price stabilisation fund is now empty. We should now focus on reducing fuel use and investigating the commissions charged by wholesalers," he said. 

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