Vietnam cuts gasoline price 5 per cent

Aug 14, 2008, 5:36 GMT

Hanoi - Vietnam reduced retail gasoline prices 5.2 per cent Thursday after world crude oil prices fell below 120 dollars a barrel, a government official said.

The price was reduced from 19,000 dong (1.14 dollars) to 18,000 dong per litre, Deputy Trade and Industry Minister Nguyen Cam Tu said.

'The price of gasoline was reduced because of many factors, and the most important factor is the decline of world crude oil prices,' Tu told Deutsche Presse-Agentur dpa. 'We reduced the price for the sake of society.'

On July 21, Vietnam raised the price of gasoline by 31 per cent to 19,000 dong per litre, saying fuel-trading firms could no longer sustain their losses. The price hikes have been painful for poor people dependent on gasoline use, such as taxi drivers, fishermen and people commuting to work via motorbike.

Officials were also concerned that fuel price hikes would exacerbate Vietnam's high inflation rate, which hit 27 per cent year on year through July.

'With the current world crude oil price so low and the newly adjusted domestic gasoline price, the fuel-trading companies are no longer losing money,' Tu said, 'but they have to compensate for the accumulated losses they had made before, which had reached trillions of dong.'

On August 5, rumors that the retail gas price would be raised to 25,000 dong per litre caused panic buying at gas stations throughout Ho Chi Minh City.

The panic buying, which paralyzed traffic in Vietnam's economic hub, did not stop until the Industry and Trade Ministry issued an urgent message denying the rumors.

The government announced the next day that it would bring criminal charges against whatever individuals or organizations had started the rumors.