The government will use one third of a state fund reserved for stabilizing fuel prices to assist local traders in keeping pump prices from rising, an official said Tuesday.
"We have decided to use the fund instead of cutting import duties," Director of the Price Management Department at the Ministry of Finance, Nguyen Tien Thoa, was quoted as saying by local news website VnExpress.
He said one third of the VND1.5 trillion (US$78.6) fund will be enough to stabilize fuel prices.
The government last week asked local fuel traders to halt price hikes until the end of June in an attempt to curb inflation, but soon after the Department of Price Management said the moratorium could last longer.
Responding to the order, fuel traders requested the government to reduce import taxes or use the price stabilization fund to help them offset losses of between VND500 and VND800 per liter.
Thoa said fuel companies have to report regularly their losses to the government during the moratorium period
If the 30-day average price of gasoline products reaches $90 per barrel, the order to halt price hikes will be rescinded, he said. The average price was recorded at $88.17 last Friday.
Since December 15 last year, the government has allowed fuel traders to raise pump prices automatically without seeking government consent if world prices rise by seven percent or more.
Fuel traders last month increased gasoline pump prices by VND590 per liter, the second hike this year.