Tuesday, January 08, 2008

Vietnam's fuel price hikes ’hurt’ living standards

16:07' 07/01/2008 (GMT+7)

VietNamNet Bridge – Rising costs of energy including power, coal and fuel will hurt the standard of living, Minister of Industry and Trade Vu Huy Hoang has said.

Speaking on the sidelines of a meeting held by the Ministry of Industry and Trade (MIT) in Hanoi last Friday, Hoang warned the oil price hike on the global market would likely affect domestic fuel prices.

"We have to import 100% of the fuel needed for domestic consumption," Hoang said.

The country's first refinery in Dung Quat will ease the pressure on fuel prices when it becomes operational in 2009.

However, Hoang said, Refinery No 1 could only produce 6.5mil tonnes of fuels annually and, by then, the country's demand would be 13.5mil tonnes per year.

In late 2007, the Government urged ministries and agencies to propose solutions to counter price fluctuations.

Ministries were asked to better their forecasts on the increases of prices, especially prices of imported materials such as fuels, fertilisers, chemicals and steel ingot.

In addition, the Government has also sped up construction of major projects like the Dung Quat Refinery and fertiliser plants in Ninh Binh and Ca Mau provinces.

If construction of these major projects progresses on time, the completed plants may provide a significant proportion of raw materials for domestic production by 2010, according to Hoang.

To cope with future price fluctuations, the MIT will ensure the local production of quality goods at reasonable prices and curb price hikes and goods shortages.

Rumour spreads

Last Friday night, drivers flocked into petrol stations in Hanoi, HCM City and Da Nang to buy petroleum due to a rumour that the price of A92 petrol would increase by VND4,000 to VND17,000 (US$1.07) per litre at 10pm.

The rumour started to spread on Friday afternoon around 4pm.

One driver on Chua Lang Street in Hanoi said that when he heard the rumour, he went to three or four gas stations, but all of them were full of customers.

In HCM City, people also crowded gas stations at 6-7pm. Minh, a staff member at the Le Thi Rieng gas station in District 1, wondered what had happened as he rushed to serve an unexpected number of customers.

Petrolimex agents in Da Nang were also very surprised to see the crowds.

A Petrolimex representative affirmed that the company did not have any plans to raise the price of petrol, though the company had been suffering losses due to the skyrocketing world oil price.

Last Saturday morning, oil and gas prices were unchanged, and the number of customers was back to normal.

According to an official from the Ministry of Finance (MoF), the ministry was co-operating with the MIT to promulgate a directive circular on petroleum retail price management in 2008. A MIT official affirmed that there had been no information about a petroleum price increase.

Last year, due to the fluctuation of the world oil price, the country adjusted the petroleum price five times. The latest was on November 22, when the world oil price was recorded at $99 per barrel. As a result, the domestic oil price increased by VND1,700 per litre to VND13,000.