HANOI, Dec 27: Vietnam has cut the import duty on oil products to five per cent from 10 per cent as it prepares to liberalize the fuel market, state media said on Saturday.

Hanoi had previously said it would allow importers set their own retail prices within a limit of up to 12 per cent from prices set by the government. However, that plan was temporarily shelved to avert a sudden surge in prices.

Energy analysts said the tariff cuts would help prevent a surge in retail prices when dealers are allowed to price the products themselves.

The Tuoi Tre (Youth) newspaper quoted a directive from the Ministry of Finance as saying the “directional” prices for petrol grades of 92-octane, 90-octane and 83-octane would be 5,600 dong (35.9 cents), 5,400 dong and 5,200 dong per litre.

Retail prices for diesel should follow directional prices of 4,400 dong and 4,200 dong per litre for the 0.5-per cent and 1.0-per cent sulphur grades, while kerosene would be subject to a price of 4,300 dong per litre.

The finance ministry said the import tariff cut for petrol, naphtha and reformate took effect from December 26.

Oil product imports are controlled by nine state-run companies including top trader Petrolimex, Petechim, PDC, Military Petrol and Oil Co, Vinapco, Dong Thap oil and gas trading company, Saigon Petro, Mekong Petro and Petec.

Petrolimex controls 60 per cent of Vietnam’s fuel market.

In September, Trade Minister Truong Dinh Tuyen told Reuters private businesses could not import fuel but were free to sell fuel in the domestic market.

Vietnam, with a population of 80 million, is expected to import around 2.5 million tonnes of petrol this year, 75 per cent from China, with high-octane petrol from Singapore and Malaysia. —Reuters