With global fuel prices consistently standing at low rates over the last few days, local fuel wholesalers are raking in whopping profits of VND1,800 per every liter of A92 gasoline, or tens of billions of dong every day.
While the public is badly hoping for a fuel price cut, the Ministry of Finance, which holds the right to make such a decision right, is still “watching over the global price fluctuation,” its representative said in an interview with Tuoi Tre Wednesday.
If the ministry does something, it said, it could reinstate the import duties slapped on fuel before a price cut would come into consideration.
“This is to ensure the interests between three parties: the government, wholesalers, and consumers,” the ministry said, an explanation that is well familiar to local consumers.
The A92 gasoline import price from Singapore, where Vietnam sources most of its fuel, on June 4 dropped to $104.9 a barrel, down by some $24 a barrel compared to certain sessions a month ago. Diesel and kerosene prices also fell to $112 a barrel and $109.9 a barrel, respectively, continuing their downward trend since late May.
Under the calculation stipulated by Decree No 84, the cost price of domestic A92 gasoline is currently VND1,400 a liter lower than the retail price. Similarly, the fat profits local fuel wholesalers are pocketing are VND1,370 a liter for diesel oil.
But the above figures are calculated based on the 30-day average price as required by the decree, while fuel wholesalers said a batch of imported fuel can be sold out within just seven to ten days.
Therefore, given the imported price of A92 petrol over the last ten days, the profits they have actually raked in can amount to as much as VND1,800 a liter.
In a better illustration, taking the import price of June 4, the gap between cost price and retail price for gasoline is an enormous VND2,800 a liter.
While some wholesalers have admitted that domestic fuel retail prices could well be slashed at the moment, none have made a move to call on the finance ministry to announce such a price cut.
“We have to wait for the decision from the ministry,” they said, seeming to deliberately forget how they had scrambled to ask for a price hike to escape losses when global prices soared.
And now, instead of cutting prices, fuel wholesalers are hiking commissions for dealers because of what they say is “harsh competition in the fuel market.”
A fuel dealer in Ho Chi Minh City said the wholesaler that supplies fuel for his facility has hiked commissions four times since May 29, just a couple of days after fuel retail prices were cut by VND300-600 a liter.
S, the head of sales of a company who runs nearly 30 filling stations citywide, said he is receiving commission worth VND750 per every liter of oil and petrol.
But that is not the highest rate ever granted, fuel dealers say, referring to some small-scale wholesalers which pay their dealers nearly VND900 worth of commission on every liter of fuel.
Retail fuel prices in Vietnam have gained a total of VND3,000 a liter this year, following two price increases, with the latest falling on April 20.
The Ministry of Finance also imposed two price cuts last month, on May 9 and 23, but these only helped reduce prices by VND900 a liter.