Fuel traders use fund drawings to offset losses

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The Vietnamese Ministry of Finance, for the second time in less than a month, has allowed local businesss to tap the fuel price stabilization fund to offset their losses.

Starting Friday, fuel companies can draw VND1,200 from the fund for every liter of gasoline and kerosene sold; and VND1,000 for every liter of diesel.

Traders are allowed to use the fund until the Finance Ministry issues new instructions.

According to Petrolimex, Vietnam's largest oil products trader, it is incurring losses of VND1,709 per liter of gasoline, which means the VND1,200 subsidy from the fund is not enouugh.

The government is trying to keep fuel prices from surging as it targets a single-digit inflation rate for this year.

By the end of October, consumer prices had already risen 7.58 percent over last December, making it difficult for the country to achieve its original inflation target of 8 percent.

On October 22, the government allowed fuel traders to start drawing money from the reserve fund to offset losses of around VND1,000 per liter of gasoline.

There has been criticism that the fund did not really benefit consumers.

However, Finance Minister Vu Van Ninh said it served its purpose well, helping Vietnam an importer of 70 percent of oil products needed keep fuel prices stable.

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