Government to keep fuel price stabilization fund

The government will continue to operate the fuel price stabilization mechanism though there are reports that a fund meant for it is running out of money.

The Ministry of Finance report that VND83 billion (US$4.25 million) is left in the fund while fuel wholesalers claim it is VND1.35 trillion in the red.

The Ministry said this means the oil companies overdrew VND1.4 trillion from it last year to cover their losses. The fund receives the VND300 surtax that has been slapped on a liter of gasoline.

But the companies complain that they suffer a loss of VND2,000-2,400 on every liter of gasoline despite using the fund to offset losses.

In December the ministry accused Petrolimex of surreptitiously drawing VND1.24 trillion (US$60 million) from the fund to cover its losses.

Last year the government provided the industry VND7 trillion in the form of import tax cuts and VND3 trillion from the fund. This year the total amount has already topped VND8 trillion.

There has been speculation that retail gasoline prices will shoot up after the Lunar New Year since international prices have rising to above $90 a barrel and seem headed for the $100 mark.

The oil firms late last year called for shutting down the fund and increasing fuel prices instead.

But the government has defended the fund saying it is meant for a rainy day.

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