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Fuel hike to drive up fares

Update: April, 03/2013 - 09:20

Many taxi firms in Ha Noi are expected to raise taxi fares by VND600 -1,000 per km in the next fortnight responding to the recent petrol price hike.—Photo Ha Noi Taxi Association
HA NOI (VNS)— Transport firms will soon raise fares to cover the losses they will likely incur from the recent 16 per cent increase in petrol prices.

In Ha Noi, taxi fares are expected to go up by VND600 -1,000 per kilometre in the next fortnight, according to Ha Noi Taxi Association chairman Do Quoc Binh.

"In the past, transport firms –including taxi companies –have struggled to deal with increased petrol prices by raising fares. But this means they risk decreased passenger numbers and reduced revenue," Binh said.

The retail petrol price jumped to VND24,580 (US$1.17) per litre last Thursday – the highest increase recorded after the Government's efforts to ensure prices remain stable.

But a representative from Taxi 52, a taxi firm in the capital, said the firm could not cover operation costs if it did not raise fares.

Taxis to raise prices with other transport firms likely to follow Cau Giay bus station during rush hour. The latest increase in petrol prices is expected to see transport firms raise their fares. — VNA/VNS Photo Minh Quyet
Taxi drivers currently operate under a contract mechanism, under which they have to pay a fixed amount to their companies.

As the petrol price goes up, they have to spend an additional VND30,000 - 50,000 ($1.4 -2.4) each day, causing their income to fall 30 per cent to VND900,000 -1.5 million ($43-71.7).

While Binh said firms had "no choice" but to increase fares, he pointed out that companies should also reduce other costs as much as possible and offer a support policy for drivers.

In HCM City, major taxi firms have also considered raising fares, said Chairman of Viet Nam Automobile Transport Association Nguyen Manh Hung.

Coaches were mainly diesel-powered, so they did not need to raise fares based on the fuel price increase, as the diesel price went up by only VND362 per litre or about three per cent.

However, they also faced higher costs for labour and road use as well as fuel, he said.

Nguyen Huyen Trang, a resident in Ha Noi's Hoan Kiem District, said that there was no question that transport fares would increase. Even motorbike taxi drivers and market vendors were increasing prices of their products and services, citing the raised petrol price, Trang said.

Hung from the transport association said the increase was beyond expectations for both the public and enterprises because Viet Nam mostly imported petrol and the global petrol price was falling.

"The Government should have reduced the import tax on petrol instead of raising retail petrol prices, which would relieve the burden for both the general population and enterprises," he said, noting that the current import tax for petrol was 12 per cent and the tax for diesel stood at 8 per cent.

The ministries of Finance and Industry and Trade announced that over a month ago, the world oil prices fluctuated at high levels while domestic retail prices were VND1,000 -3,000 per litre below base price.

To stabilise the market and curb inflation, the Government did not allow prices to increase and used the Petrol Price Stabilisation Fund to cover losses.

However, last Thursday the fund ran out – leading the ministries to approve the petrol increase.

Nguyen Anh Tuan, vice head of the Price Management Department of the Finance Ministry, said that without the price stabilisation fund, the petrol price would have gone up four times since the beginning of this year.

Currently, the fund is managed by enterprises who must ask for the ministries' approval to use the fund in cases where world oil prices go up but the Government doesn't want to increase the domestic price.

Tuan said the funding process needed to be transparent, so the ministry would make monthly announcements about the fund rather than quarterly announcements in order to inform the public and other authorities in a timely manner. — VNS



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