Friday, August 17, 2007

Vietnam cuts gas prices

Gasoline retail prices were cut by US3¢ per liter this afternoon following a decision by the Ministry of Finance.

Accordingly all gas prices will drop VND500 per liter: A91 petrol now goes for VND11,300 ($0.69) per liter, A90 for VND11,100 ($0.68), A95 for VND11,600 ($0.71) and A83 for VND10,900 ($0.67).

For now, kerosene and diesel are staying put at VND8,600 per liter.

The government intervention comes as local petrol traders who were given the right to establish their own retail pricing in May have ignored weakening global prices for weeks.

Global crude dropped more than $1 Thursday as credit fears pounded stocks and a threat of storm damage to U.S. Gulf rigs and refineries appeared to recede.

US crude fell $1.09 (1.5 percent) to $72.25 a barrel on the day, after rallying US¢95 on Wednesday. London Brent crude was down $1.43 to $70.21.

Deputy minister of finance Do Hoang Tuan Anh said five teams would check price cuts at petrol stations.

Punitive action would be taken against companies found delaying price reductions.

Anh added that petrol retail price cuts would help control soaring commodity and service prices.

Bui Ngoc Bao, deputy general director of Petrolimex, which holds a dominant market share of over 50 percent, attributed the traders’ reluctance to lower prices to late guidelines from the finance ministry.

Petrol trading companies received the ministry's formal instructions Thursday, Bao said.

His explanation sounded convincing as traders had submitted price hike plans to the finance ministry prompted by rising global trends immediately after the government had lifted its price control on May 1.

Vietnam is Southeast Asia's third-largest crude oil producer with output averaging 350,000 barrels per day. But it still imports most of its oil products in the absence of major refineries.

The country is building its first refinery, the $2.5 billion Dung Quat complex in Quang Ngai Province, which will open in early 2009, expected to reduce the country’s heavy dependence on oil imports.

The second refinery is planned in the central province of Thanh Hoa, with preparations underway.

The government has given permission for the third refinery, with the first choice of location to be in Long Son commune, Ba Ria-Vung Tau province.

Reported by M.Quan – Compiled by Dong Ha