Ministry mulls fund to hedge spikes in petroleum prices
30/12/2007 09:47 am
UB.Laws/Hanoi - Importers
of refined petroleum products would be required to contribute to a fund
to hedge against volatility in global prices, under a draft regulation
being circulated by the Ministry of Finance.
The director of the ministry’s Pricing Management Department, Nguyen Tien Thoa, said the regulation would mandate importers contribute a part of their profits to the fund during times when import petrol prices are low. When world prices climb, they would receive rebates from the fund in return for keeping a lid on domestic retail prices.
The scheme would also protect consumers from unexpected price hikes, as the regulation would also provide that retail petroleum prices could only be adjusted once every three to six months.
This year, the retail price of petroleum was changed five times, three of which changes were increases, due to volatility in the world market. Petrol prices on the world market have surged sharply this year, with A92 petrol going up 8 percent, diesel fuel 4.8 percent and kerosene 10.5 percent, according to statistics from the Ministry of Industry and Trade.
Thoa noted that the regulation was still in draft stage and said that the ministry would discuss its provisions further with the Ministry of Industry and Trade and petroleum importers before officially issuing it.
In 2007, due to skyrocketing world prices for crude oil, the Ministry of Finance estimated that the Sate spent roughly 1.1 trillion VND (68.75 million USD) to hold petrol prices down.
The Government had planned to deregulate and float petrol prices this year but changed its plans due to the sharp volatility of the world market.
However, the Ministry of Industry and Trade continues to press for deregulation, together with a programme of compensation for major petrol consumers such as the coal, power, paper and cement industries, in a move to avoid retarding growth in these sectors.
The director of the ministry’s Pricing Management Department, Nguyen Tien Thoa, said the regulation would mandate importers contribute a part of their profits to the fund during times when import petrol prices are low. When world prices climb, they would receive rebates from the fund in return for keeping a lid on domestic retail prices.
The scheme would also protect consumers from unexpected price hikes, as the regulation would also provide that retail petroleum prices could only be adjusted once every three to six months.
This year, the retail price of petroleum was changed five times, three of which changes were increases, due to volatility in the world market. Petrol prices on the world market have surged sharply this year, with A92 petrol going up 8 percent, diesel fuel 4.8 percent and kerosene 10.5 percent, according to statistics from the Ministry of Industry and Trade.
Thoa noted that the regulation was still in draft stage and said that the ministry would discuss its provisions further with the Ministry of Industry and Trade and petroleum importers before officially issuing it.
In 2007, due to skyrocketing world prices for crude oil, the Ministry of Finance estimated that the Sate spent roughly 1.1 trillion VND (68.75 million USD) to hold petrol prices down.
The Government had planned to deregulate and float petrol prices this year but changed its plans due to the sharp volatility of the world market.
However, the Ministry of Industry and Trade continues to press for deregulation, together with a programme of compensation for major petrol consumers such as the coal, power, paper and cement industries, in a move to avoid retarding growth in these sectors.
Source: VNA
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