Petrolimex sets new price levels.
The Vietnam National Petroleum Group (Petrolimex) officially increased gasoline prices on March 11.
Oil and gasoline companies are required to adjust their prices, by VND1,600 per liter (7 US cents) to VND17,880 (84 US cents) for RON95 and VND17,280 (80 US cents) for RON92, while diesel increased only slightly, to VND15,830 (74 US cents) per liter.
Prices have come down twice this year already, by a total of VND2,210 (10 US cents) per liter, or by nearly 40 per cent compared to the high on July 7, 2014 of VND25,640 ($1.2).
On March 10 the Standing Committee of the National Assembly agreed to raise the environmental tax rate on gasoline from VND1,000 (5 US cents) per liter to VND3,000 per liter (14 US cents).
According to Minister of Finance Dinh Tien Dung, under Vietnam's international commitments it must cut import taxes, which combined with global gasoline price falling at the beginning of the year significantly affected the State budget. Retail gasoline prices in Vietnam are still lower compared to Laos, Cambodia and China, however, by VND5,000-6,000 (23-26 US cents) per liter. This has encouraged cross-border smuggling.
To compensate for reduced revenue to the State budget, the government proposed the environmental tax increases mentioned above, bringing in an expected VND35.5 trillion ($1.6 billion) per year, or VND23.7 trillion ($1.1 billion) more than previously per year.
Most members of the Standing Committee of the National Assembly agreed with the proposal because revenue from environmental taxes is used to protect the environment and to compensate for reductions in import duties.