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Nguyen Minh Phong, head of the Economics Department at the Hanoi Institute for Social Development Studies, said given current global petrol prices, there was scope for domestic fuel prices to be cut.
“The issue here is whether state management entities and enterprises are ready to do this,” he said.
A92 petrol prices in Singapore – Vietnam’s main import market – have fallen nearly $13.6 per barrel this month, a drop which could help lower the local petrol price by about VND1,780 per litre. However, the retail petrol price in Vietnam remains at VND21,300 per litre.
Commenting on these figures, Phong said market authorities should consider the benefits for consumers instead of stressing the state or enterprises’ benefits. He said the price should be adjusted in line with the market mechanism.
If the petrol price was managed more flexibly, even a small decrease in petrol prices would pick up consumer sentiment while positively impacting on the price level of many other products, Phong added.
However, petroleum traders and state management agencies said petrol prices over the last 30 days were still high enough that enterprises were trading in the red.
Vuong Thai Dung, deputy director of Petrolimex which holds a 60 per cent petroleum retail market share, said in the 30 days from July 7, the average price of petrol imported from Singapore was around $123 per barrel.
“With this price level, Petrolimex is suffering a loss of VND500-600 per litre for all kinds of petrol and fuel,” said Dung.
A Military Petroleum Corporation representative said from August 1 to August 4, the company had imported A92 petrol at an average price of $123.26 per barrel. Once the firm factored in the transportation fee of $2.3 per barrel and the VND/USD foreign exchange rate of 20,680 and other taxes and fees, the gross cost was VND21,959 per litre.
Nguyen Tien Thoa, director of the Ministry of Finance’s Price Management Department, also agreed that the retail price was still VND500-600 lower than the gross cost per litre, thus, there had been no real opportunity for enterprises to lower their prices.