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MOF won’t let petrol companies suffer losses   2009-06-10 - VietNamNet/TBKTVN

Minister of Finance Vu Van Ninh told the press on the sideline of the ongoing National Assembly session that a petrol price increase would be approved by ministries if there was no other choice.

 

 

Ninh said that because the Ministry of Finance (MOF) did not approve enterprises’ proposal to raise retail petrol prices does not mean that it will let enterprises suffer losses.

 

He said that though the Government has rejected the proposal on raising retail petrol prices, it has agreed to delay tax payment and enterprises’ contributions to funds in order to help ease enterprises’ difficulties.

 

Ninh admitted that petrol importers may incur losses at certain moments, when oil and petrol price increases. However, he said that domestic prices cannot be adjusted every day when the world’s petrol price goes up and down. He said that it is necessary to keep close watch over the world prices for 20-30 days before making a decision.

 

He affirmed that a petrol price increase should be approved only if there is no alternative.

 

Prior to that, in Instruction No 172 announcing the Prime Minister’s decision on regulating the petrol price, the Prime Minister assigned the Ministries of Finance and Industry and Trade to keep close watch over the world’s prices to regulate the domestic prices based on the market principle, provided that the price adjustments do not cause overly big impacts on people’s lives.

 

In order to do that, the Prime Minister allows the Ministry of Finance to apply necessary measures. It can make a decision on slashing import taxes on petrol and oil products, or delaying enterprises’ contributions to the petrol price stabilisation fund.

 

Meanwhile, Petrolimex, which is holding 60 percent of the petrol market share and complaining about big losses, has critically responded to ministries’ decision on rejecting the proposal on raising the retail petrol price.

 

According to Vuong Thai Dung, Deputy General Director of Petrolimex, the corporation is incurring the loss of over 2,000 dong for every litre of petrol sold, 2,000 dong for every litre of diesel and 3,000 per kilogramme of mazut sold. The low sale prices have made Petrolimex incur the loss of 50-60 billion dong per day.

 

Dung said that in the first five months of the year, the car petrol price has increased by 55 percent, while the domestic price has increased by 14 percent only. Similarly, the diesel price has increased by 27 percent in the world, while the domestic price decreased by 5 percent; the kerosene price has increased by 21 percent, while the domestic price remains unchanged. Especially, mazut has risen by 55 percent, while the domestic price has increased by 6 percent only.

 

How has Petrolimex been doing?

 

Vuong Thai Dung: I have to remind you that on September 16, 2008, the Government decided that the domestic petrol price will perform in accordance with the market mechanism rules. However, in fact, the retail petrol price is still being defined by government agencies, while enterprises do not have the right to set retail prices.

 

The prices in the world’s market have been escalating. The domestic retail prices at many different moments do not truly reflect the world’s prices. Meanwhile, the dollar price has increased by five percent.

 

After the latest petrol price increase of 500 dong per litre on May 8, Petrolimex has two times sought permission from the Ministries of Finance and Industry and Trade to raise retail prices, but the price increases were rejected, why?

 

Vuong Thai Dung: Our proposal was not considered thoroughly by government agencies. We have received repeated instructions from the ministries that they do not agree on the price increase, and that it is necessary to keep close watch over the world’s prices for some more time. However, the world’s price keeps rising – how much longer will we have to wait?

 

Government agencies said that tax has been lowered to help enterprises, but in fact, tax has been lowered by five percent only, or just several hundred dong, not enough to offset losses. Moreover, any tax cut decisions always take time to take effect.

 

What will happen if ministries still follow the same way in regulating petrol prices?

 

Vuong Thai Dung: This would lead to many consequences. First, it would compound enterprises’ losses. Second, consumers would not have enough information about prices. Third, the gap between the domestic and regional prices would become wider.



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