A customer watches gas being filled at a gas station in Hanoi. Photo: Reuters
Vietnamese consumers no longer have to follow the news on fuel prices. Now they just know prices will rise whenever gas stations shut down or withhold sale.
Prior to the recent price hike on Monday, people had complained that many stations across the country refused to sell than more than two liters. Some of them even turned down clients completely or simply put out an "out of gas" notice.
Experts say the practice, in anticipation of a price increase, shows that the fuel market is in the hands of sellers and the government should not loosen reins on the market just yet.
Major fuel distributors have confirmed there was no disruption in the supply chain.
Petrolimex, which holds 60 percent of the market, said it had delivered sufficient amount of fuel to its agents.
Dang Vinh Sang, general director of Saigon Petro, said even after the Dung Quat refinery shut down due to technical faults, fuel supplies for the local market remained ample.
Gas stations were expecting a sharp price hike after global oil prices surged, so they tried to cut back on sales and hoard fuel, Sang said.
Vo Van Quyen, director of the Domestic Market Department at the Ministry of Trade and Industry, told Vietweek that fuel traders are required to stockpile 30 days worth of fuel beforehand and thus the temporary closure of Dung Quat should not be a problem.
Hoarders and speculators will be dealt with strictly, he said.
Prices of oil products on Monday were raised for the third time in less than a month. The most common grade of fuel in Vietnam, 92-RON gasoline, now retails at VND23,000 per liter, up 5 percent.
Immediately after the hike, the market went back to normal, with gas stations running smoothly as usual. Experts said that the development has exposed market management weaknesses and showed that traders can easily create pressure to raise prices.
They also suspected distributors worked together and announced the same price increases at nearly the same time, despite differences in input costs and inventories.
Vietnam has recently allowed distributors of petroleum products to raise selling prices without having to seek government approval whenever global oil prices increase. The policy aims to create a market-driven fuel sector, but experts say that may not happen anytime soon.
Ngo Tri Long, former deputy head of the Market and Price Research Institute, said as the market is still dominated by a few traders, the government should not give them complete pricing freedom.
It is necessary to require traders to disclose inventory levels and input costs to see whether they really face losses and need to increase prices, Long said.
Fuel traders had raised prices on July 20 and then on August 1.
Nguyen Manh Hung, chairman of the Vietnam Automobile Transport Association, said since the first hike, gasoline prices have gone up 10 percent. With gas accounting for 40 percent of total costs, taxi companies will have no choice but to raise their fares.
Mai Linh and Vinasun, two major taxi operators, have increased rates by VND800-1,000 a kilometer.
Prior to Monday's hike, economists had called for the government to cut import duties on fuel products so that traders could keep prices stable. The Finance Ministry, however, opted for a price hike, keeping the 12 percent import tariff on gasoline unchanged.
An expert who asked not to be named said once again, consumers are the ones who lose in the relationship between them, the state and businesses.
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