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VietNamNews

Ministry defends steep petrol price increase

Update: March, 10/2012 - 09:00

HA NOI — This week's petrol price hike was reasonable and in accordance with careful scrutiny, said Deputy Finance Minister Vu Thi Mai.

The statement came following complaints that the rise was too high.

The Finance Ministry on Wednesday allowed petrol retailers to increase their sales price by VND600-2,100 per litre, depending on fuel type, against a sharply upped global price.

Mai said the ministry decided to raise the price based on the global situation during the past 30 days, the price having reached a record high of US$130 per barrel.

She said the Government had exempted petrol import tax and used money from the Price Stabilisation Fund to cut petrol retail prices.

Money from the fund ran out, therefore, the adjustment was unavoidable, Mai added.

Director of the Pricing Control Department Nguyen Tien Thoa said that the petrol price would surge by up to VND4,200-6,500 in stead of VND600-2,100 per litre if the Government did not exempt the import tax.

It was decided to cut the tax in the national economy's interest, causing the State budget to reduce significantly, Thoa said.

The finance ministry said the State budget lost roughly VND20 trillion ($952 million) last year due to the reduction of the petrol import tax. The figure in the first two months of this year was estimated at VND3.9 trillion ($185.7 million).

According to current regulations, the next petrol price adjustment can be made 30 days after the previous adjustment. However, Thoa said, the finance ministry would lower the price within the next 10 days if the global price slid.

He added that the current rise would only be temporary with global crude oil this year forecast to be in the range of $105-112 per barrel.

The finance ministry estimated that the petrol price hike would add roughly 0.85 per cent to the country's inflation rate this year. — VNS

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