The Ministry of Industry and Trade is committed to meeting domestic demands for fuel until March, given the current reserves and imports.

Vietnam’s oil industry can meet 70-75% of the local demands.

Vice Minister of Industry and Trade (MoIT) Do Thang Hai gave the remarks during a monthly Government press conference this week.

According to Hai, Vietnam’s oil industry can meet 70-75% of the local demands, or even up to 80% at certain points. At present, the main sources of petrol supplies come from Dung Quat and Nghi Son oil refinery plants, accounting for 35% and 40% of the market share, respectively.

However, since the beginning of the year, a difficult financial situation forced Nghi Son plant to scale down operation to below 80%, and at present, at 55-60% of the capacity. The situation has impacted domestic supplies of refined petroleum in the local market.

Dung Quat refinery plant has raised production capacity to 105%, but the 5% increase, or around 28,000 tons of cubic meters, was insufficient to cover the shortage.

Deputy Minister Hai expected imports and reserves of refined petroleum would be enough to cover the demand in March.

For the coming months, Hai said the MoIT requested 10 major fuel distributors to import an addition of 2.4 million cubic meters of oil in the second quarter.

“This would be more than enough to make up for the shortage in case Nghi Son plant is not be able to meet the market demand after May,” Hai continued.

At the meeting, Vice Minister of Finance Nguyen Duc Chi said the Government plans to reduce the environmental protection tax for fuel and petrol products by VND500 per liter of diesel, and VND1,000 per liter of fuel until the end of this year.

“This would result in a decline of VND14.5 trillion ($645 million) in revenue for the state budget,” he said.

Referring to concerns that the tax cut remains modest against the backdrop of skyrocketing petrol products in the global market, Chi said the move is still under consideration and his ministry would further consult other ministries/agencies for a final decision.