Fuel price stabilization fund should be disbanded: Deputy Minister

Vietnam has yet to fully switch to a market economy, thus State agencies have to remain involved in fuel price governance for price stabilization, Hai said, citing a conclusion of the Government.

With more than ten years of regulating local fuel prices, the trade ministry noted that using the fund has always been an effective economic tool, but not as an administrative intervention of the State.

The fund helps compensate for the gap between base prices and retail prices, particularly in certain sensitive periods, and allows the country to not tap the State budget to stabilize fuel prices.

If the fund had not been tapped when electricity prices rose sharply last month, local fuel prices would have surged, he said.

Fuel products are among a few essential items whose prices are gradually adjusted, in accordance with the market price.

Besides this, Decree No.83 regulated a fixed formula to work out fuel prices, with taxes and other fees taken into account. Additionally, fuel prices will be revised every 15 days, based upon the prices traded in Singapore, the main fuel seller for Vietnam.

Along with the active 28 fuel wholesalers in the country, the trade ministry is currently considering granting licenses to more fuel traders for operations in the coming time, as long as they meet requirements stipulated in the decree.

As for the inter-ministries of Industry-Trade and Finance that regulate local fuel prices, they can only make price adjustments based upon the fund. With each liter of imported gasoline, local fuel wholesalers have to extract VND300 to add to the fund. When the fund is excessively used, it will face a deficit.

In response to a source claiming that all local fuel traders faced a funding deficit following the recent price adjustment, Deputy Minister Hai cited the latest statistics at a meeting of the price regulation board on April 2 as saying that only nine out of the 28 wholesalers encountered a funding deficit.