Sunday, November 25, 2007

Vietnam raises retail fuel prices by nearly 15 percent

HANOI (AFP) — Vietnam hiked fuel prices at the pump by almost 15 percent Thursday, raising fears of worsening inflation, to cope with world oil prices that are nearing 100 dollars per barrel.

The price per litre of petrol rose 1,700 dong (0.11 dollars) to a 13,000-13,300 dong (0.80-0.82 dollars) band under a decision by the finance, and trade and industry ministries, the government said on its official website.

Without the price hike, losses of trading enterprises would have spiralled to 12,000 billion dong (740 million dollars) for the year, Deputy Finance Minister Tran Van Ta was quoted as saying by the VNExpress online newspaper.

“The trading enterprises and the government could not stand (the losses) anymore. Therefore, consumers need to share the burden,” he said.

Fuel trading enterprises in Vietnam were allowed in April to set their own retail prices to better compete and respond to market changes, but the communist government reserved the right to intervene when necessary.

Oil retreated below 98 US dollars in Asian trade Thursday after rising to a new peak of 99.29 dollars per barrel on Wednesday.

Experts in Vietnam worry that the increase in retail oil prices will help raise the consumer price index, which the government wants to keep below the targeted 8.5 percent annual economic growth for 2007.

In October, consumer prices rose 9.34 percent year-on-year, the General Statistics Office said. The increasing cost of living has sparked public anger and criticism in the national assembly.

Vietnam has vast oil and gas reserves in the South China Sea and is a major exporter of crude oil, but the country currently lacks major operating refineries and must import all petroleum products.