Petrol price hikes deal a blow to economy

Experts have warned that if the government doesn’t cut the environmental protection tax and fees on petroleum products, the national economy will suffer.

Just within four months, the petrol prices increased four times by VND4,591 per liter for RON 95 and VND4.418 for E5 in total. The continued petrol price has triggered a new wave of goods and service price increases.

Petrol price hikes deal a blow to economy

Petrol price has increased by 20 percent so far this year

Petty merchants at farm produce wholesale markets in HCMC all said the petrol price increases have increased transportation costs, pushing selling prices up.

Nguyen Thanh Chau, head of the Thai Binh Market Management Board, confirmed that the fruit price has increased by several thousand dong per kilogram in the last few days.

Chair of the HCMC Cargo Transportation Association Bui Van Quan said the petrol price hike has put more pressure on transport enterprises, which are facing many difficulties . They have had to re-negotiate with goods owners to adjust the transport fee to cover the higher expenses for petrol.

Previously, steel distributors covered the transport fees. But now, as the petrol price has increased sharply, buyers have to pay the fees. Some sales agents don’t collect a transport fee, but have raised selling prices by VND200,000-300,000 per ton.

Previously, steel distributors covered the transport fees. But now, as the petrol price has increased sharply, buyers have to pay the fees. Some sales agents don’t collect a transport fee, but have raised selling prices by VND200,000-300,000 per ton.

The petrol price has risen in the context of the petroleum price stabilization fund depletion. As the fund’s spending on E5 is much higher than other petroleum products, the more that E5 is sold, the more rapidly the fund declines.

Analysts said the price gap of VND1,000 per liter between biofuel and mineral gasoline is not attractive enough for consumers to choose biofuel.

 

Meanwhile, enterprises don’t want to sell biofuel because the more they sell, the fund will have to spend more to stabilize the prices.

If it doesn’t do this to curb the E5 price, biofuel will lose its competitiveness and the government’s program on encouraging people to use biofuel instead of mineral petrol will fail.

According to petroleum companies, the petroleum price stabilization is not the only tool that helps ease prices.

A senior executive of Saigon Petro said the E5 sales have been decreasing rapidly. The biofuel sales accounted for 20 percent of total sales in January, while the figures reduced to 18 percent in February and to 17 percent in March.

He believes that the best solution to the problem is slashing the environmental tax protection on E5 by VND1,000 per liter to create the price gap of VND2,000 per liter, which would reduce prices on E5.

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