The prices of oil and petrol sharply reduced from 3pm on Thursday, returning to levels not seen in the past five months, as global prices fell and the National Assembly Standing Committee's reduced the environmental protection tax on fuel.

E5 gasoline decreased by VND2,710 per litre (11.5 US cents) to a retail price of VND25,070 per litre, while RON95 declined by VND3,600 per litre, to a selling price of VND26,070 per litre.

Diesel oil prices also decreased by VND1,740 to VND24,850 per litre.

The National Assembly Standing Committee's reduction of the environmental protection tax on gasoline also contributed to curbing domestic gasoline prices, along with a fall in global prices.

The environmental protection tax on gasoline was reduced from VND4,000 to VND1,000 per litre on RON95 gasoline, while diesel oil was reduced from VND2,000 to VND500 per litre.

To support the life and production of people and businesses after the COVID-19 pandemic, the Ministry of Industry and Trade and the Ministry of Finance both decided to keep the level of the deduction for the price stabilisation fund in various petroleum commodities and reduce the deduction level of the price stabilisation fund for kerosene products to give priority to the sharp reduction of domestic petrol and oil prices.

Specifically, the ministries set up the price stabilisation fund for E5RON92 at VND950 per litre, RON95 at VND950 per litre, diesel oil at VND550 per litre, kerosene at VND700 per litre and fuel oil at VND950 per kilogramme.

Should petrol price stabilisation fund be removed?

After much pressure from the public, the Ministry of Finance proposed removing regulations on the establishment and use of the petrol price stabilisation fund in the draft report of the revised Price Law.

This proposal received mostly approval from the public, especially in the context of high gasoline prices, while the petrol price stabilisation fund fails to promote its regulatory effect.

Economist Ngo Tri Long told the Public Security News that the removal of the petrol price stabilisation fund needs to be considered, but it should be done early.

Agreeing with this view, To Hoai Nam from the Viet Nam Association of Small and Medium Enterprises (VINASME) said that when an economy followed the market mechanism, the elimination of petrol price stabilisation fund was inevitable.

Economist Pham The Anh said that whether or not to be removed, the stabilisation fund must be based on the fund's goals and how well it is operated.

“According to my assessment in the past period, this fund has not done well in stabilising gasoline prices, while that depends a lot on the forecast of world petrol prices,” said Anh.

The Viet Nam Petroleum Association (VINPA) has repeatedly proposed to abandon the fund to operate under the market mechanism.

On the other hand, if the fund is removed, public transparency in price management will be better, creating equal opportunities in the system of focal enterprises.

Therefore, the proposal of the Ministry of Finance is considered reasonable at this time.

The Ministry of Finance said that, when associated with the regulation of putting gasoline under the management of reference prices, it is completely possible to consider removing the fund, helping gasoline prices to follow the market mechanism. — VNS