Hanoi (VNS/VNA) – While the reduction environmental protection tax fall in gasoline prices from April 1, most transport companies are in difficulty.
Retail gasoline prices dropped by more than 1,000 VND per liter following the latest adjustment by the Ministry of Industry and Commerce and the Ministry of Finance. As a result, the retail price of RON95 biofuel fell by VND1,039 to a high of VND28,153 (US$1.23) per litre, while E5RON92 was adjusted down by VND1,021 to not exceed 27,309 VND per litre.
Meanwhile, 0.05S diesel has increased from VND1,447 per liter to VND25,080, and kerosene has increased from VND1,519 per liter.
According to the ministry, this is the second drop after seven consecutive petrol price hikes in 2022 that caused price increases of more than VND 6,500 per litre.
“If the environmental protection tax remained the same, the domestic price of gasoline during this operating period would have increased,” a ministry official said.
Vu Tuyet Hanh, a representative of Cuong Thang Transport Company, which specializes in freight transportation on the North-South route, said, “Transport companies expect gasoline prices to fall further as the adjustment in gasoline and oil prices does not help reduce the burden on businesses. The transport activity continues to encounter difficulties. Many vehicles had to stop working.
Nguyen Ngoc Thanh, Director of Kim Phat Transport Company, said, “Fuel for container trucks usually accounts for around 40% of the transport cost. But from mid-2021, the price of oil has increased by around 50% and companies cannot raise freight rates to that level.
Other shipping companies said that if freight rates increased sharply they would undoubtedly lose customers, but if they didn’t they would continue to lose money.
Nguyen Hong Dong, driver on the Hanoi – Noi Bai route, said, “Currently, the price of gasoline is high and my income is less. I will lose customers if I raise the price. Some of my colleagues have had to give up driving their cars and stay home because their income is not enough to cover the expenses.
Bui Danh Lien, an expert with the Hanoi Transport Association, said companies in the association are worried that gasoline prices are still too high.
“More cars are in the parking lot, and businesses are being forced to reduce trips and journeys. If gasoline prices continue to stay high, transportation companies won’t be able to weather the storm,” he said.
“The impact of the COVID-19 pandemic has crippled businesses, with no revenue, while the cost of driving tests and gasoline have risen sharply recently, leaving them struggling to survive.”
Lien said many companies would be forced to sell cars or even go bankrupt.
The aviation industry is also in a bind due to soaring fuel prices. Vietnam Airlines calculates that if the price of jet fuel remains at USD 130 per barrel for the whole of 2022, the airline’s cost could increase by VND 5.7 trillion. If a barrel rises to USD 160 as expected, costs will rise to VND 9.12 trillion, compounding the expected loss in 2022.
Experts said ocean freight rates to US and European routes, which have risen again since the start of the year, are expected to increase again, which will put Vietnamese import-export businesses in trouble.
Duong Ngoc Trung, Deputy General Manager of SDS – MP Logistics, said the price of gasoline has increased by 30 percent compared to last year, raising freight costs by another 5 to 10 percent.
Economists said that petroleum products are currently subject to many taxes simultaneously. Although gasoline is not a luxury product, it still has to bear excise duties.
Economist Ngo Tri Long said it was advisable to reduce the special consumption tax on gasoline again to ease inflationary pressure and avoid further impact on people and businesses.
Expert Dinh Trong Thinh said the special consumption tax should be levied on harmful goods and services and luxury goods, not gasoline, an essential commodity. Moreover, gasoline was already subject to an environmental protection tax.
The director of the MoIT’s domestic market department, Tran Duy Dong, said that if gasoline prices continue to rise, he would consider reducing the special consumption tax.
“We still need to calculate longer and have more scenarios,” Dong said. “The ministry will propose a scenario to continue reducing gasoline taxes, such as environmental tax, special consumption, VAT and diversification of supply./.