Finance Minister Vu Van Ninh praised the state fund for maintaining stable fuel prices as both legitimate and effective on Monday.
Vietnam continues to import 70 percent of its oil products, which makes local prices dependant on world market trends, Ninh told the press on the sidelines of a National Assembly meeting in Hanoi.
"In other countries fuel prices are left to fluctuate freely and it's normal to have prices change daily or even several times a day," Ninh said. "But in Vietnam prices can't change so often, and thus the fund was set up to keep them stable for a certain period."
Ninh said the fund is serving its purpose and that the government will always inform the public when the funds are put to use.
Earlier this month, the National Assembly People's Aspiration Committee claimed that the public wanted the fund abolished because consumers have paid between VND300-500 per liter into the fund since 2009 without enjoying any clear benefits from it.
The committee also said that there is no legal basis for the fund as Vietnam's price management regulations contain no provisions sanctioning such a reserve.
But Ninh argued that the current ordinance on pricing allows the government to take measures to stabilize prices if necessary and that the fund is one of those measures.
The People's Aspiration Committee said the establishment of the fund is unorthodox but not illegal, he said.
Last week, the government allowed fuel traders to start drawing money from the reserve fund to offset losses. Starting Friday, fuel companies have been approved to draw VND550 from the fund for every liter of gasoline and diesel sold and VND700 for every liter of kerosene.
The decision came after fuel traders said they were incurring losses of around VND1,000 per liter of gasoline due to a jump in the price of oil products imported from Singapore.