Dealers are required to pay into the fund in times of low prices for imported petroleum products and, in light of controls on retail petrol prices, draw from the fund to cover losses in times of high import prices.

The fund, established in March, was intended to play a significant role in stabilising domestic petrol prices in times of global price fluctuations, said Nguyen Tien Thoa, director of the Ministry of Finance’s price control management. However, Thoa explained, the fund had never been adequately funded as high global prices had kept petrol dealers in a losing situation since the fund was established.

The new regulation, contained in Circular No 159/2009/TT-BTC, gave greater detail on the operation of the fund. Under the circular, petrol dealers would be required to pay VND500 (USD 0.028) from the retail sale of each litre of petrol into the fund. In times of global petroleum price volatility, a supervisory group from the ministries of Finance and of Industry and Trade would adjust the levy up or down or suspend its collection as conditions warranted, although some were saying that petrol dealer representatives should also play a role in supervising the petrol price stabilisation fund.

If prices of imported petroleum products are to cause petrol dealers to lose more than VND500 per litre under current official prices, the dealers would be allowed to increase retail prices by a maximum of VND500 per litre per increase as well as draw from the price stabilisation fund. If the fund was inadequate, dealers would be allowed to increase prices beyond the VND500 per litre cap.

Losses to petrol dealers would be computed against import petroleum prices as trade in Singapore within the previous 20 days, plus taxes and fees, commissions, transportation and other costs to dealers.

Over the past five months, the ministries of Finance and of Industry and Trade had permitted petrol dealers to raise the retail price of fuel six times, or a total of VND3,700 (USD 0.21) per litre for petrol A92. It is currently retailing at an officially authorised price of VND14,700 (USD 0.83) per litre.