Economists slam measly gasoline price cut, import tax | Look At Vietnam

Economists slam measly gasoline price cut, import tax 

May 24, 2012

A worker pumps gasoline to a motorcycle at a gas station in Hanoi. The pump price of A92 gasoline was reduced by VND500 per liter to VND23,300 (US$1.1) on May 9.
Economists have criticized the recent fuel price cuts and the reimposition of the import duty on petroleum products as coming too little, too late.
The pump price of A92 gasoline was reduced by VND500 per liter to VND23,300 (US$1.1) on May 9, and diesel by VND300 to VND21,600.
Import duties, which were scrapped on March 8, have been reinstated at 2 percent on gasoline and diesel and 3 percent on kerosene and fuel oil.
Gasoline prices increased twice this year, in March and April, by a total of VND3,000.
Nguyen Minh Phong of the Hanoi Socioeconomic Research Institute said the reduction came in response to public pressure after a VND900 increase on April 20. Petroleum companies were only losing VND500 per liter at that time.
He said the Ministry of Finance, instead of raising the import tax, should have ordered petroleum companies to make deeper cuts in gasoline prices.
Many firms are having difficulty merely surviving due to a slump in demand and other problems, and could do with bigger price cuts to help reduce costs, he explained.
The government’s tax breaks won’t suffice, he said, referring to a tax relief package of VND29 trillion ($1.4 billion).
Le Dang Doanh, an economist, said: “The meager price cut and import tax increase would make people lose faith (in the government’s policies). Restoring public confidence is much more important than collecting gasoline import taxes.”
The fuel price cuts should have been bigger because global prices have fallen sharply. According to the Vietnam National Petroleum Group, also known as Petrolimex, the gasoline price in Singapore fell to $121.6 per barrel on May 9 from $128.1 on April 20.
Nguyen Tien Thoa, head of the Ministry of Finance’s Price Control Department, said the interests of fuel traders, consumers, and the government come under consideration whenever gasoline prices are adjusted.
According to the tax framework issued by the department, duties on gasoline and diesel can be raised to a maximum of 20 percent and 15 percent.
The tax revenues can be used to stabilize gasoline prices when global prices rise, Thoa said. “The price is forecast to rise this winter when demand increases.”
Thoa said gasoline accounts for 3.2 percent of the basket of goods and services used to calculate the consumer price index. The VND500 price cut would help bring down the CPI by 0.24 percentage point, he said.
But most industries said the reduction is too meager for them to cut their own prices.
Nguyen Manh Hung, chairman of the Vietnam Automobile Transport Association, said: “It is an insignificant reduction. So, transport firms cannot cut their prices.”
Pham Xuan Bang, a Hanoi taxi driver, said: “We (taxi drivers) did not expect the small reduction. It came just to make sure people are not shocked by future hikes.”
Policy issues
Ngo Tri Long, former deputy head of the Market and Price Research Institute, said retail prices are adjusted based on average fuel costs over 30 days.
“The period is too long, failing to precisely reflect changes in the world market. We need to shorten the period, maybe to a week.”
Thoa said: “We are aware of the problems in calculating fuel prices and plan to fix them.”
He said shortening the period to 10 or 20 days will be considered.
A new policy limiting the commissions fuel companies pay retailers could also be introduced, he said, adding that excessive commissions are paid in the hope of expanding market share.
The average price during the 30-day period ending May 8 was VND828 per liter lower than the retail price on that day, he revealed.
Some analysts said the fuel price adjustments are not timely or based on market forces.
In 2009 the government passed a decree stipulating that fuel prices would be based on the market.
Under the decree, businesses are allowed to adjust retail prices and only have to inform the Ministries of Finance and Industry and Trade about it.
But due to spiralling inflation, the government invoked a clause in the decree which says “if the price hike can affect socioeconomic development, the government will adopt measures to stabilize fuel prices” to repeatedly intervene.
With the government only increasing fuel prices when it is no longer able to keep them unchanged, the hikes have come in massive chunks instead of incremental ones, the analysts pointed out.
But other analysts said that, since the gasoline market is monopolistic – with Petrolimex holding some 60 percent of the market – the government should regulate the prices.
The country’s sole refinery Dung Quat contributes too little to the market to help the government stabilize prices when world prices are volatile.
The 6.5-million-ton-per-year refinery, located in the central province of Quang Ngai, meets only 30 percent of the domestic demand. It is seeking to sell a 49 percent stake to foreign investors to raise funds to expand capacity by 54 percent to 10 million tons a year.
This would help it to meet 40-45 percent of demand, according to the Binh Son Refining and Petrochemical Co, which runs the $2.2-billion refinery.
Even with Dung Quat running at full capacity, Vietnam imported 10.65 million tons of oil products in 2011, according to the General Statistics Office.

By Ngan Anh, Thanh Nien News (The story can be found in the May 18th issue of our print edition, Vietweek) 

Total finds oil in Vietnam

COURBEVOIE, France, Nov. 23 (UPI) -- French supermajor Total announced a new discovery of light crude oil off the coast of Vung Tau

in the south of Vietnam in the Mekong delta region.

Total, through its Total E&P Vietnam subsidiary, announced it discovered oil in its Lac Da Nau offshore prospect in block 15-1/05. The prospect is located more than 65 miles east of Vung Tau and about 40 miles off the coast.

The well is the first exploration well drilled and the first discovery in the block. Test flow rates reached 4,200 barrels of light crude oil per day.

Vietnam holds more than 500 million barrels of proven oil reserves, most of which is located in offshore fields.

Total lists its share of production in the region at around 246,000 barrels of oil equivalent per day in 2008.

Indian, Pak hackers deface govt websites

Islamabad: Indian and Pakistani hackers are engaged in a round of tit-for-tat defacing of government-run websites of the two countries, targeting such major organisations as India’s oil and gas major Oil and Natural Gas Corporation of India (ONGC) and its Pakistani counterpart Oil and Gas Regulatory Authority (OGRA).
The cyber warfare began in mid-November when an Indian group of hackers known as HMG or ‘Guards of Hindustan’ defaced the website of Pakistan’s OGRA and deleted all its data.
The move created a buzz in cyberspace as HMG had earlier hacked a number of Pakistani communities on the social networking website Orkut.
Apparently acting in retaliation, a group calling itself the Pakistan Cyber Army (PCA) hacked five Indian websites, including those of ONGC, Indian Institute of Remote Sensing (IIRS), Indian Railways and the Kendriya Vidyalaya in Ratlam.
While the websites of ONGC and Indian Railways were quickly restored, the IIRS website is still blank. In a message posted briefly on the ONGC website, PCA said that the hacking was carried out in retaliation for the hacking of the OGRA website.
“Back off, go read some course books, else you will lose both, your name and this game. We will literally smoke your doors off like other groups did before,” said the message from PCA.
Responding quickly to the actions of the PCA, HMG took control of the website of Kendriya Vidyalaya in Ratlam. The website still features a message from HMG asking the site owner to fix its ‘flaws’.
“Your site was hacked by Pakistani hackers, now ur site is in our Indian hackers’ control,” said the message from HMG.
After internet usage became popular in the Indian subcontinent in the early 1990s, Indian and Pakistani hackers including those based in the West often engaged in tit-for-tat defacing of websites of both countries.
Those activities subsided after a few years. Hackers cannot control a website permanently even if they break into it. They usually post a fake page on a hacked website.
Ironically, PCA has asked Indian authorities to take action against HMG for hacking Pakistani websites or get ready for more action

Vietnam begins operating new oil field

Vietnam has opened a new oil field that will boost national crude oil output by 21 percent by the end of this year, officials said.
Four wells from the Golden Lion oil field off Vietnam's southern coast are now producing 60,000 barrels per day, Vu Ngoc An, general manager of Cuu Long Joint Operating Company said Wednesday. The output will reach at least 65,000 barrels per day when two other wells begin operating by the end of this year, he said.
The company has also discovered oil in two other fields, where it plans to start production in 2010 and 2013, he said.
"We were fortunate to find not just one, but four oil fields," An told reporters "Before us, some companies had already explored in the area, but they did not find anything."
Cuu Long's owners include PetroVietnam, which controls 50 percent , and U.S.-based ConocoPhillips, which owns 23.25 percent. It has invested over $1 billion in the Golden Lion field, An said.
The company also operates the nearby Black Lion oil field, which started production five years ago and produces 55,000 barrels per day.
Last year, Vietnam produced 16 million tons of crude oil, or 307,000 barrels per day. It hopes to produce 17 million tons next year.
The country currently exports all its crude oil. Its first refinery is slated to open early next

Comprehensive ties with Egypt get refreshing

A number of accords, including those on oil and gas and tourism, between Vietnam and Egypt were signed at a business forum in Cairo on November 9. The business forum attracted interest from hundreds of leading industrial companies, importers, exporters and goods distributors from the two countries. It was held on the sideline of a two-day meeting opened on the same day by the Vietnam-Egypt Inter-Governmental Committee on Economic, Trade-Investment, Cultural, Educational and Scientific-Technological Cooperation. The meeting recognised major progress made in economic cooperation this year with bilateral trade revenues expected to almost double last year’s figure to 200 million USD. Minister of Industry and Commerce Vu Huy Hoang and Egyptian Minister of International Cooperation Fayz Aboulnaga, who are heads of the respective national sections of the Inter-Governmental Committee, pledged to provide their partners with the best available conditions to fully tap each other’s potential and boost all-round cooperation between the two countries in the years to come. During his stay in Egypt, Hoang, who was a co-chair of the Inter-Governmental meeting, paid a courtesy visit to Egyptian Prime Minister A. M Mohammed Nazif and handed over President Nguyen Minh Triet’s personal letter to President Hosni Mubarak of Egypt. He also met with senior Governmental officials such as the Ministers of International Cooperation, Oil and Gas and Investment, to discuss measures for stronger bilateral cooperation. In all the meetings, the hosts reaffirmed their determination to promote comprehensive cooperation with Vietnam.
(Source: VNA)

Venezuela, Vietnam set up joint oil refining venture

Venezuela and Vietnam have agreed to create two joint oil refining companies, Energy and Oil Minister Rafael Ramirez said Wednesday.
"PDVSA (Petroleos de Venezuela) and Petrovietnam will work together to build the two joint companies -- one to transport oil to Vietnam and the other to refine that oil in Vietnam, at a refinery we jointly own," Ramirez, who also heads state-run PDVSA, said after a meeting with Vietnamese officials.
Vietnam and Venezuela are expected to announce on September 15 a new oil exploration agreement in the oil-rich Orinoco basin in eastern Venezuela, where Petrovietnam already has a concession.
As Latin America's top oil producer and fifth largest oil exporter to the United States, Venezuela a year ago established a joint-ownership system of its oil reserves giving PDVSA a minimum 60 percent control of any foreign venture in the field.
Venezuela says it produces some 3.3 million barrels of oil per day (bpd), 2.7 million of which are for export. The International Energy Agency, however, puts Venezuela's oil production at less than 2.5 million bpd.
Venezuela and Vietnam also plan to build a production facility to make energy-saving lightbulbs in Venezuela, Ramirez said.
"It will meet not only our needs but also those of ALBA members and countries in South America that cooperate with us, including Cuba," he added, referring to the alternative free trade market that Venezuela's leftist President Hugo Chavez is spearheading. ALBA includes Venezuela and fellow leftist regimes in Cuba and Bolivia.
Vietnamese Minister of Industry and Commerce, Vu Huy Hoang, welcomed his government's cooperation with Venezuela, saying it offers "many advantages and great challenges to worldwide trade barriers."