VietNamNet Bridge - The Ministry of Finance is backing the petroleum price stabilisation fund despite mounting opposite.
|Petrol prices are not allowed to float in Vietnam as they are in many other countries|
The ministry’s (MoF) Minister Vu Van Ninh said the fund reached the planned target of price stabilisation by the government.
Under the MoF’s instruction, the fund was built from surcharges collected from petrol and oil retailing and kept by petroleum traders which would be used for price stabilisation.
Ninh said in other countries, petrol prices were often adjusted by world market prices, which led to different daily pricing levels.
“However, in Vietnam management agencies do not want such frequent price fluctuations. Instead, it is necessary to give a specific time to adjust and the fund was established for this aim,” he said.
Ninh said at the beginning of 2010, the fund was effectively used to keep prices stable and it was likely to continue to be used this year so petrol and oil prices do not badly affect the consumer price index (CPI).
“Petrol and oil are sensitive inputs for production and consumption which can strongly impact on common prices and consumers’ psychology. Using this fund is also an active way for the state to manage prices,” Ninh said.
The MoF said from 2009 to July 30, 2010, the fund collected VND3,619 billion ($190 million), in which VND1.05 billion ($55.2 million) was used for price stabilisation.
However, last month the National Assembly’s People’s Aspiration Committee said its investigation results showed that there was no basis for the establishment of this fund.
Tran The Vuong, head of the committee, said the establishment was not suitable with regulations stipulated in the Price Ordinance in 2002 because Article 6 specifically regulated price stabilisation methods which did not include the establishment of the fund.
“Voters proposed to consider and abrogate this fund which was collected from consumers. However, it is not clear how this fund is used and managed as well as how to benefit for consumers,” Vuong added.
Ninh said according to the Price Ordinance, the government was allowed to apply price stabilisation methods and the usage of this fund was only one of many ways for the common benefit.
He said whenever the fund was used the MoF still openly proclaimed how much it would be deducted to support petroleum traders.