Vietnam fuel prices climb again despite stabilisation fund intervention

Fuel prices in Vietnam rose again on March 11,  despite the government having decided to draw on its fuel price stabilisation fund to soften the impact of the ongoing global oil market turmoil.

According to Reuters, the Ministry of Industry and Trade in Hanoi announced that petrol prices had increased by 7.66% while diesel had climbed 1.6%. In contrast, kerosene prices dropped by 7.7%.

To limit the scale of the increases, however, Vietnamese authorities have now started using the country’s Fuel Price Stabilisation Fund. In doing so, the government allocates VND4,000 (about $0.15) per litre for petrol and kerosene, and VND5,000 per litre for diesel from the fund.

The stabilisation mechanism, in similar form to other nations around the region, is designed to help cushion domestic fuel prices during periods of global market volatility. Under the current system, fuel distributors contribute a fixed amount from each litre sold throughout the year into a government-managed reserve, which can later be used to offset sharp price swings as is being seen at present.

Despite these efforts though, fuel costs in Vietnam have surged significantly since the outbreak of the conflict involving the United States and Israel against Iran. Data from leading fuel distributor Petrolimex shows petrol prices have now climbed 44% since the start of the conflict. Over the same period, diesel prices have jumped 59%, while kerosene has risen by a reported 66%.

The Vietnamese government has already introduced several other measures aimed at reducing fuel consumption. On March 10, authorities urged businesses to allow employees to work from home where possible to cut transport demand. 

Prime Minister Pham Minh Chinh has also instructed the Ministry of Finance to eliminate environmental protection taxes on fuel in a move intended to help ease the burden on consumers and businesses as costs continue to rise.