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Domestic demand remains high as petrol prices spike

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Though Vietnamese enterprises imported no petrol in the first two months of the year, they still raised the retail price.

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The Dung Quat Oil Refinery

 

A report from the HCM City Taxation Agency found that petrol import turnover in January and February was zero, while diesel import turnover was $158 million, down by 42.9 percent compared with the same period last year.

The petrol sold in the domestic market is from the Dung Quat Oil Refinery. As the petrol price in the world market is higher than the domestic price, enterprises have been restricting imports.

However, the retail petrol price has been raised. On March 2, the price per liter of E5 RON 92 increased by VND939 and of RON 95 by VND946. Kerosene increased by VND700-959 per liter.

After the price adjustments, E5 RON 92 was selling at VND17,211 per liter, while RON 95 was VND18,549.

Explaining the price increase, the management agency said the global petrol price had increased by 8 percent on average in the last 15 days. 

RON 92, for example, which is used to make E5 RON 92, has increased to $66.78 per barrel, or 8.9 percent. RON 95 barrel has seen the price increase by 8.5 percent to $68.645.

Dang Dinh Dao from the Hanoi Economics University said that while distributors can buy petrol from domestic sources at low prices, they still sell at high prices, because of the world price escalation. 

He went on to say that the lack of transparency in calculating the production cost is the major reason behind the unreasonable pricing.

Previously, petroleum distributors had to import 60 percent of total amount needed to satisfy domestic demand. However, the increase in domestic supply has helped reduce the import proportion. 

“It is unreasonable to use domestically sourced materials, but sell products based on Singapore’s prices,” Dao said.

Pham Van Hoa, a National Assembly deputy, also said it was unreasonable to set retail price based on Singapore’s price, while the products sold in the market are made in Vietnam.

At present, management agencies make petrol price adjustments periodically by considering Singaporean market prices. He said the Ministry of Industry and Trade had to draw up a better roadmap for petrol price adjustment to ensure benefits for consumers and enterprises.

The increased use of domestic products and restricted imports would offer a great advantage to Vietnam’s enterprises, helping them cut production costs and become more competitive. 

 

Source: VietNamNet

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