A worker pumps gasoline to a motorcycle at a gas station in Hanoi. Photo by Ngoc Thang
The domestic prices of 92 RON, the most commonly used grade of gasoline in Vietnam, increased by 2.45 percent to VND24,210 (US$1.15) a liter on December 18.
The price hike was made by fuel suppliers after the Ministry of Finance agreed to a maximum increase of VND584 per liter for 92 RON, VND653 per liter for diesel and VND384 per liter for kerosene.
As soon as the ministry's decision was made, Petrolimex, the country's leading importer and trader of oil products, and other fuel firms raised their 92 RON prices from VND23,630 to VND24,210.
The price of 95 RON gasoline was also up by 2.4 percent from VND24,130 to VND24,710.
Fuel prices have seen five hikes and six decreases this year. This most recent hike was the first hike after three slight decreases since August, but it is nearly twice the average sum of the three decreases.
The total sum of the three decreases was only VND930 per liter.
The Ministry of Finance explained that world's fuel prices have continued to increase over the last 30 days while Vietnam's fuel price stabilization fund, a kind of rainy day reserve that is raised when businesses make profits, is running dry.
As of December 10, the rainy day fund had a combined VND72 billion ($3.4 million) left, and seven companies had no money left in their coffers, according to the ministry.
Also on December 18, the finance ministry ordered fuel companies to stop using the funds to subsidize gasoline and diesel (at VND200-300 per liter).
Vietnam still has to rely largely on fuel imports, as its sole oil refinery Dung Quat in the central province of Quang Ngai can meet just thirty percent of local demand.
Another project, the 200,800-barrel-per day Nghi Son oil refinery in the north-central province of Thanh Hoa, is under construction and is projected to start operations in 2017 to take the local supply up to 70 percent of the country's requirements.
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