Price rise fears spur run on Vietnam petrol
HANOI - Motorists besieged petrol stations in Vietnam's capital on Monday, fearing a fuel shortage and price hikes linked to the
prospects of war in Iraq.
A number of Hanoi petrol stations have been shut since Sunday, showing signs that read: "Blackout", or "Closed for Checking
Inventory."
Some customers were seen carrying large containers to stockpile fuel and at many stations, black market sales of petrol in plastic
water bottles sprang up.
Supply in other places, like Ho Chi Minh City, appeared normal, however.
Crude oil is Vietnam's largest export, earning it $3.2 billion last year, but it has no domestic processing facilities and so has to
re-import finished oil products like diesel and gasoline. Import prices are their highest in more than two years.
There are about 10 million motorcycles in use among Vietnam's 80 million people and they are the most commonly seen vehicles in
Hanoi.
The rush to buy followed warnings by the government, which controls and subsidises fuel, that prices may have to go up because
state-run energy firms face shortfalls.
Hanoi followed through by announcing late on Monday that effective on February 18, the retail price for the highest grade of petrol,
unleaded, would go up by 300 dong per litre to 5,600 dong (36 U.S. cents), state-run Vietnam Television reported.
Diesel prices will rise by 200 dong per litre to 4,300 dong (28 U.S. cents) effective on February 18 as well, and the government is
scrapping a 10 percent import tax it had imposed on state oil companies, the report said.
"Since late 2002 oil and petrol firms have been facing losses and the state has to partly subsidise, but it cannot keep doing so
forever," Hoang Tho Xuan, the Trade Ministry's head of domestic policy department, was quoted by Monday's Tuoi Tre (Youth)
newspaper as saying.
One petrol station in downtown Hanoi ran out of supplies by midday on Monday after 100 customers rushed to fill up.
It put up signs for motorists saying it had been unable to restock due to police restrictions on trucks entering the city during the
day.
Jittery public
"Most of the stations in Hanoi are closed today, and were even closed yesterday afternoon. I am panicked because I don't know
what is happening," said a woman motorcyclist in her 30s, who was waiting for fuel.
Authorities warned petrol stations against holding back on supplies in the expectation of higher prices and tried to reassure a jittery
public.
"(Petrol) is an essential product so the state must always guarantee the national reserves and reserves for circulation of at least
40-50 days," Xuan said, adding the government was expected to announce a price hike this week.
The Trade Ministry would revoke the business licences of petrol trading companies found hoarding fuel until prices were higher, Xuan
was quoted by another state-run daily as saying.
Xuan said the retail system of state-oil firm Petrolimex, which supplies most of Vietnam's stations, must operate as usual.
Petrolimex runs more than 70 stations in Hanoi.
Global oil prices have risen 45 percent in three months on fears of a U.S.-backed war against major oil producer Iraq, which America
accuses of amassing weapons of mass destruction.
Last week, Vietnam's Deputy Prime Minister Vu Khoan expressed concern about the impact of crude oil prices on Vietnam's
economy should a war with Iraq occur.
Benchmark Brent crude hit two-year highs last week and traded at around $32 a barrel on Monday. ($1=15,400 dong)
By Christina Toh-Pantin - Reuters - February 17, 2003
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