In a surprise move, the Vietnamese government Tuesday raised retail gasoline prices and cut oil import tax.
Gasoline became VND900 (US$0.5) per liter costlier with effect from 3 pm. A92 gas now costs VND11,000 ($0.68); A90 gas VND10,800; and A83 gas 10,600.
Kerosene and diesel stay unchanged at VND8,600.
Tariffs on all oil import have been cut from 15 percent to 10 percent.
The move came as a surprise to consumers and petroleum businesses since a few days ago the government was considering either raising prices by VND500 or cutting import tax after world crude prices began to recover.
Globally, oil climbed above $60 Tuesday, drawing strength from a rise in Asian and European stocks and on forecasts for a drop in gasoline inventories in the US.
Analysts said there was no sign yet of weakening oil use in the US and China, the top two consumers.
US crude gained 59 cents to $60.66 a barrel, having dropped $1.57 on Monday to touch a two-week low of $59.55.
At a press conference Tuesday to announce the new measures, Deputy Minister of Finance Truong Chi Trung said they were meant to align domestic prices with global trends while ensuring the government, consumers, or businesses did not suffer.
The retail price should have been hiked by VND1,500 rather than VND900 since gasoline distributors would suffered a loss of VND200 per liter, he revealed. This meant the government would have to continue subsidizing oil.
Vietnam periodically adjusts import taxes and retail prices to cope with global oil price volatility and check petrol importers’s profits.
Despite being one of Southeast Asia’s largest crude exporters, Vietnam does not have a refinery and is completely dependent on import of petroleum products.
Last year its oil subsidy bill came to VND8-9 trillion.