The Ministry of Industry and Trade (MoIT) would continue to use all necessary instruments to ensure domestic petrol prices are below those in the global market and at an affordable level to the public.

Trade Minister Nguyen Hong Dien at the National Assembly. Photos: VGP

Minister of the Industry and Trade Nguyen Hong Dien gave the remarks during an interpellation session held at the National Assembly today [March 16].

According to Dien,  petrol prices in the domestic market depend on the global situation. However, the MoIT would help ensure the rising level stays under control.

He noted as of March, prices of petrol and gas products in the international market rose by 44-60%, but the domestic prices increased only in a range of 25-40% thanks to the use of petrol price stabilization fund, Dien said.

“In the past price review period, the price of each liter of petrol is subsidized between VND500 and 1,500   from the stabilization fund, depending on the types of petrol products,” Dien said, adding without the fund, there is “no way” to keep petrol prices lower than those in the international market.

As petrol remains a key commodity under public administration, Dien stressed the significance of the price stabilization funds.

But as the fund had been used extensively in the past, there remains limited room for maneuver, Dien expected the National Assembly to soon approve a 50% cut in environmental protection tax as a more effective option to curb the upward trend of petrol prices.

Overview of the session.

Step up domestic production

Over the public concern on possible shortage of oil and gas products, Deputy Prime Minister Le Van Thanh said the Government has every tool under its disposal to ensure sufficient supplies.

Thanh, however, acknowledged domestic production has only been able to meet 70% of the demand or 13 million cubic meters.

In the short term, Thanh said the Government would focus on raising domestic production and imports to meet the needs in the upcoming two or three months.

“To avoid possible impacts on inflation, it is necessary for the Government to use price stabilization funds or tax measures to keep the prices stable. But in case the market prices continue to rise, Government agencies may turn to support measures to aid the economy,” Thanh suggested.

For the long term, Thanh said the key issue for Vietnam is to avoid dependence on petrol imports. In this regard, the Government has requested the Vietnam National Oil and Gas Group (PetroVietnam) to build an additional oil refinery plant at Vung Tau.

“With an estimated 10 million cubic meters of petrol from this plant, along with current 13 million cubic meters from the other existing two, we would have a combined of 23 million cubic meters to meet domestic demands,” Thanh said.

Thanh also hinted at the possibility of raising oil exploration capacity, which currently meets only 50% of the demand for petrol production.

The retail prices of biofuel E5-RON92 and RON95 in Vietnam rose to an all-time high of VND28,980 (US$1.27) and VND29,820 ($1.3), respectively, on March 11.

The latest price adjustment marked the seventh hike in a row since mid-December 2021, bringing the prices of petroleum products to above the previous peaks in July 2014 of VND26,140 per liter and closer to VND30,000 per liter.