Gasoline retailers should think long and hard before raising their prices as the flow-on effect is sure to dash the government’s hopes of keeping the CPI growth for the full year below eight percent.
|If petrol retailers raise their prices, the prices of many goods and services will be pushed up (Photo: K.K)|
That’s the opinion of Hoang Tho Xuan, who heads the Domestic Market Policy Department of the Ministry of Industry and Trade.
The petrol suppliers are perfectly justified in seeking the government’s permission to raise their prices, what with crude oil hitting US$88 a barrel and imported gasoline climbing to US$89 a barrel in the past few days.
Most of the smaller retailers are hurting bad and their larger brethren will soon be in the same boat if they don’t get a government subsidy or a blessing from Mr. Xuan’s ministry and the Ministry of Finance to charge more at the pumps.
Technically, Mr. Xuan points out, the Finance Ministry’s price schedule allows petroleum enterprises to raise their prices, something that they will have to do soon if they are to be profitable again.
But, and it’s a big but, they cannot charge more at this stage as the flow-on effect would push up the prices of many goods and services. It would be irresponsible.
One petrol retailer says it was losing VND400-500 per liter on average but, for the past three days of crude oil trading at US$87, the loss has soared to VND900 a liter.
At this rate, the losses at major firms like Petrolimex could reach into the billions of dong every day.
At the moment these companies are holding out thanks to the zero import tariff on gasoline that came in two months ago, but not for much longer. If the price of crude oil keeps rising, petrol could well cost more at the pumps very soon.
Mr. Xuan’s prescription is for a return to direct government subsidies rather than a price hike.