Vietnam hikes fuel prices to fight smuggling Source: 23-JUL-2008 Intellasia | Businessweek
Jul 23, 2008 - 7:00:00 AM
A woman fills her motorbike at a gasoline station in downtown Hanoi, Vietnam on Monday July 21, 2008. Vietnam on Monday increased fuel prices as much as 31 percent in a bid to cut state subsidies and fight smuggling. (AP Photo)
Vietnam increased fuel prices as much as 31% Monday in a bid to cut state subsidies and fight smuggling, state media reported.
The price of gasoline rose 31% to US$1.10 per litre (.26 gallon), while a litre of diesel rose 15% to 94 cents, the Tien Phong (Pioneer) newspaper said.
Despite the latest hikes, fuel prices in Vietnam are still lower than in other countries, the newspaper quoted Finance minister Vu Van Ninh as saying.
The increases help "to limit smuggling of fuel across the borders... and partly reduce state subsidies," Ninh was quoted as saying.
Traders smuggle thousands of litres of gasoline each day into neighbouring Cambodia because of Vietnam's cheap fuel prices, state media have reported.
Local fuel importers have lost US$854 million in the first six months of this year because of the difference between international fuel prices and the domestic retail prices set by the government. All the losses will be covered by the government.
The importers could lose an additional US$2.63 billion in the second half of the year if prices were not increased and world oil prices remained near US$139 a barrel, the paper quoted a Ministry of Finance's report as saying.
The online newspaper VnExpress quoted Ninh as saying despite the hikes, importers will still lose 59 cents per litre of diesel.
Light, sweet crude for August delivery was hovering near US$130 a barrel Monday in electronic trade on the New York Mercantile Exchange, off a trading record above US$147 hit earlier this month.
In February, the government increased gasoline prices 11% and diesel prices 36%.
Vietnam exports about 17 million tonnes of crude oil each year but has to import all refined oil products. The country's first oil refinery is scheduled for start-up next year.
