Vietnam gas companies seek tax cut amid price hike flak

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The Vietnam Gas Association is requesting the government to cut the import tax on cooking gas to 2 percent from 5 percent so that retail prices can be lowered.

If approved, the tax reduction will allow gas prices to be cut by at least VND7,000 per 12-kilogram cylinder, the Tuoi Tre newspaper reported, citing Nguyen Si Thang, chairman of the association.

Local gas distributors have raised the price of a 12-kilogram cylinder by VND42,000 (US$2) this month, citing price hikes in global markets.

Apart from rural areas where coal and wood are still used for cooking, many households in Vietnam use LPG gas cylinders delivered to their homes by retailers.

The recent hike sparked strong criticism among consumers and advocacy groups as they suspected that gas companies had colluded to raise prices. The increase was the third in two months, bringing gas prices to up tp VND460,000 ($22) per 12-kilogram cylinder.

Thang has told Thanh Nien that there was nothing unusual with the hike. The increase was similar among all distributors simply because prices are calculated based on the same formula that the association has created for each region, he said.

However, Nguyen Mong Hung, chairman of a consumer protection group in Ho Chi Minh City, said the authorities need to look into the increase.

"It's necessary to prevent any kind of collusion between gas companies," he said, adding that the government should also set a limit on commissions that distributors are allowed to offer to their retail agents to stabilize prices.

An industry insider said gas retailers used to earn only VND30,000 per 12-kilogram cylinder, but now gas companies, in an attempt to boost sales, are letting their retailers earn commissions of up to VND60,000 per cyclinder.

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