Petrol price hike follows global market

Thursday, Jul 24, 2014 08:34

The adjustment in the selling price of petroleum has stirred a controversy, especially in its transparency though it has become more flexible.Tran Van Thinh, General Director of the Viet Nam National Petroleum Group (Petrolimex) told Vietnam News Agency about the publicity and transparency in petrol trading.

What is the basis for Petrolimex to increase petroleum prices this year?

Tran Van Thinh

Petrol trading requires tight management controls by the Government. The increase of petroleum selling prices is based on the Government's Decree No 84/2009/ND-CP dated October 15, 2009 where traders can adjust petrol prices up to 7 per cent in line with the world prices and other changes. The adjustment has been decided by the ministries of Industry and Trade and Finance since the first quarter of 2010. Petrolimex has followed the instruction from the two ministries to increase petrol prices five times, diesel four times, oil four times and mazut three times while reducing prices of diesel (five times), oil (three times) and mazut (four times). In addition, the two ministries also use the petrol price stabilisation fund. The price hike on July 7 was because the basic petroleum price was higher than the selling price in Viet Nam.

Several people said the local petrol price tended to increase even when the global price was dropping. What are your comments?

I want to emphasise that petrol adjustment was decided by the two ministries. The management follows the Decree 84 which suits the domestic market as well as ensuring all targets. Statistics showed that the oil price adjustments included both increase and decrease of oil prices in the world market. The petrol price was not reduced due to the continuous rise in the world market. Price of petroleum RON 92 in Singapore on an average was rising. In the last three months, the prices were US$117.96 a barrel in May, $120.46 in June and $123 in July.

In addition, the two ministries had applied different methods to stabilise petrol prices by allowing the use of the stabilisation fund for nearly five months. Increasing the exchange rate between Vietnamese dong and US dollar by 1 per cent on June 19 also saw a rise in the petrol import price by 1 per cent.

Could you tell us about the work done by Petrolimex to implement the Directive 11/CT-BCT on strengthening publicity and transparency in electricity and petrol trading activities?

Petrolimex has implemented the directive strictly as soon as it was promulgated. In May, the group established a column titled "Petroleum Transparency" on our website to publish information on petrol trading activities.

Petrolimex announced the use of the price stabilisation fund in each quarter. We have also published all information about our business and production results on the website according to regulations from the State Securities Commission. This information included the quarterly and yearly financial reports and the audited financial reports. The report was also listed in the column. Petrolimex has also sent press releases to all media outlets in case there was a petrol price adjustment. Information on the world petroleum prices, basis price and market share of traders have been published on the Ministry of Industry and Trade's website.

Petrolimex has accounted for half of the market share of the domestic petrol market. What solutions and proposals would be submitted to the Government to stabilise the petrol market?

We believe the most important factor to stabilise the market is how to ensure sufficient supply of petrol in any circumstances. Petrolimex has mainly signed long-term contracts with petrol exporters and diversified suppliers to limit the effects from external factors. In addition, Petrolimex has introduced measures to reduce business costs regularly to ensure effectiveness.

The local petrol production meets with only 30 per cent of the country's demand, thus making the market dependant on the world's oil supply. This was the reason that the price adjustment was not fixed but changed with the market demand, ensuring benefits to the Government, consumers and enterprises. — VNS

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