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 3 Apr 2009

Vietnam to raise fuel prices

Vietnam's Finance Ministry said on Thursday it had approved a proposal by oil product importers and distributors to raise the retail price on popular 92-octane petrol by around 4.5 percent due to higher world prices, Reuters reported.

The new price, effective from April 2, would be 11,500 dong (64.7 US cents) per litre, up from 11,000 dong previously, the ministry said in a statement.

Top importer and distributor Petrolimex said it had raised pump prices from 0830 GMT with 92-octane grade now at 11,500 per litre and 95-octane grade at 12,000 dong per litre, up from 11,500 dong per litre previously.

Prices of diesel and fuel oil would be kept unchanged, the ministry said.

"The hike in only gasoline prices would not have a big impact on inflation as well as the economy at large because it accounts for a small part of the price basket," said Tran Du Lich, Director of the Ho Chi Minh City Economic Institute.

All oil products contribute 2.58 percent to Vietnam's consumer price index basket.

"Meanwhile the decision to keep unchanged prices of diesel and fuel oil, a key input to industrial users, would help them cope better with the recession," Lich added.

The fuel price hike came amid slowing consumer prices in March as Vietnam, like its regional neighbours, felt the heat of a sharp slowdown in exports as recession hits its key markets.

Last week the government said consumer prices in March rose only 1.32 percent from December last year and fell 0.17 percent compared to February.

The Finance Ministry on Thursday also waived the tax of 500 dong per litre for contributions to the fuel stabilisation fund for diesel products, the ministry's statement said.

Last month the Finance Ministry said it had established a state-run fund to stabilise domestic oil product prices and cover losses incurred by importers when world prices are higher than domestic prices.

Starting from March 23, oil product importers, all state-owned, had to contribute 500 dong ($0.03) for each litre of their retailed refined products to the fund.

Vietnam imported 2.95 million tonnes of oil products in the first quarter, down 17.7 percent from a year earlier, the government has said, mainly thanks to supply from the country's first refinery, the 140,000-bpd Dung Quat plant that has been operational since late February.




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