Fuel price regulation, riddle wrapped in mystery

TN News

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  A man waits to have his motorbike filled at a gas station in District 12, Ho Chi Minh City, on August 13 when the latest increase in fuel prices took effect. The gas station, like many others across the country, closed the day prior to the price hike, claiming to have run out of stock.

The happy days when people saw multiple, albeit small, reductions in fuel prices have ended, with prices changing direction with three increases this month.

92-RON gasoline, the most common fuel in Vietnam, is priced at VND23,000 per liter after the latest adjustment made last Monday. As other things are also subject to price hikes because of the knock-off effect following the fuel price rise, people are tightening their belts more and more.

But this is not the worst news.

The Department of Price Management recently announced that fuel businesses have been allowed to adjust prices once every 10 days down from 30 days by up to 7 percent based on global prices. The adjustment does not need the government's approval.

This means consumers will probably see an increase of 22 percent in prices every month. Dizzying increases in fuel prices are fully expected in the upcoming months.

Price management officials may find such increases alright because inflation is falling, meaning analysts have no reason to complain that fuel price rises will stoke inflation.

The increase in accordance with world prices is also evidence that the government is in the process of leaving prices to the market.

Moreover, since businesses have been given the right to adjust prices, anyone who wants to question a price hike can only go to businesses for answers. And then the businesses will reply that "the increase is made in accordance with regulations."

How convenient this is!

But, for people, the continuous price increases and the new regulation are a different story.

It is a fact that fuel prices in Vietnam rely much on the world market, since our country has to import most of its fuel. Everyone knows that world fuel prices fluctuate, sometimes weirdly, but people cannot help but feel resentful about the way local gasoline and oil prices are managed.

Firstly, why are fuel prices always subject to frequent and large increases, but only occasional and small decreases? Is it due to lack of information, poor management by government agencies, or some trick by fuel businesses? All people know is that they are the only ones to suffer in this.

Secondly, why is it so difficult to make information about how businesses calculate fuel prices transparent? It seems like a complex thing because the government keeps promising that it will make them public one day, but has done nothing.

Businesses themselves do not seem to know if they are making profits or losses. Just a couple of months after complaining about losses of trillions of dong, a fuel business would be found making big profits.

Thirdly, why is it so hard to usher in real competitiveness in fuel trade? There are more than 600,000 businesses in the country, but just around 10 are allowed to enter the fuel business. And among them the biggest is bigger than the rest put together. How can we call it a "competitive market"?

Fourthly, what is the fuel price stabilization fund meant for? Businesses charge consumers to contribute to the fund, but where is it when fuel prices go up?

Fifthly, whose interests do the government agencies assigned to manage fuel prices represent - the people's or businesses'? Officials have always spoken for the businesses instead of doing something to force them to make information transparent or taking necessary measures to cut costs to reduce prices"¦ as demanded by people.

There are lots of questions that people want to ask. But with the nonstop price hikes, not only of fuel but also of medicines and other items, they have no time to seek the answers, only worry about how to deal with them.

By Pham Chi Lan

The writer is a renowned economist

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