Do not let wholesalers determine fuel prices

Aug 30th at 13:13

30-08-2012 13:13:47+07:00

More than a month ago local fuel wholesalers were granted the right to determine fuel retail prices through their own initiative, and consumers have since had to suffer four fuel price hikes in a row, with the latest, which arrived on Tuesday, being the last straw

Even worse, certain dealers and filling stations somehow acknowledged the price increases before hand, and thus started to speculate the products, neglecting public anger.

The root of the problem, according to economic expert Ngo Tri Long, lies in the current fuel price management, which he said goes against what a market economy is supposed to have.

“The government allows wholesalers to determine fuel retail prices in a context where the domestic fuel market is a monopoly,” Long told Tuoi Tre.

Long said such an illogical management system should be removed immediately, and the price-determining right should be returned to the government.

The Vietnamese fuel market is currently entirely run by state-run wholesalers, with Petrolimex holding the largest market share of more than 60 percent. There is almost no competitiveness in the market, and “it is completely wrong when the businesses can set the prices,” said Long.

Other monopoly sectors of the country include post and telecom, electricity, and fresh water.

“Only the government can balance the interests of the three relevant parties -- the state, wholesalers, and consumers -- in their price calculation,” said Long, who is the former deputy head of the Ministry of Finance's Market and Price Research Institute.

“Meanwhile, wholesalers will always adjust [fuel] retail prices in a way that will maximize their profits, and rarely will they share the interest with consumers.”

Minister’s promise

Nearly a year ago, newly-selected Finance Minister Vuong Dinh Hue said in a statement that fuel prices will be managed to benefit the more than 80 million people of the country, rather than for the interest of the 11 state-run wholesalers.

The declaration once delighted the public, creating a belief that the picture of the fuel market would be brighter in the future.

But doubts have now arisen given the current development of fuel prices, which have so far this year gone through three small drops and five big increases.

Tuoi Tre contacted the minister, asking for an open interview about the promise and the reality.

But Hue refused, saying he still does not want to comment on public skepticism at the moment.

And he asserted, “What I have been doing is in line with what I declared earlier.”