Vietnam raises gasoline prices amid higher global oil prices
Higher global oil prices has prompted Vietnam to raise gasoline prices for the second time this year, a move that state-controlled media said Monday will reduce government subsidies and fight fuel smuggling into neighboring China and Cambodia.
Starting Sunday, gasoline prices were hiked 10 percent to 8,800 dong (56 cents) per liter and diesel prices were raised 18 percent to 6,500 dong (41 cents).
"We can't and also were not able to maintain our price system separated from the world market. It's the same with the gasoline prices," Vice Finance Minister Tran Van Ta was quoted by Youth newspaper as saying.
Ta said despite the price hikes, which will cut government subsidies by 4 trillion dong (US$253 million), the government is still expected to lose 5.2 trillion dong US$329 million) in the second half of this year.
Oil importers have lost 6.45 trillion dong (US$408 million) in the first six months of this year due to high world oil prices. The losses were covered by the government, which last hiked gas prices in March. The Vietnamese government maintains price control on some key commodities such as gasoline, electricity and steel.
The lower prices made possible by government subsidies have prompted fuel smuggling into China and Cambodia, where the prices were 30-40 percent higher.
The government hopes that the higher local prices will give smugglers less incentive. Authorities among border provinces have been instructed to strengthen border patrols to curb gasoline smuggling.
The government estimates that the hikes will add 10 percent to production costs in the cement industry, 9 percent to fishing and some 5.7 percent for the transportation sector.
The Associated Press - July 04, 2005.
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