92

**Table 20: Cost structure and transfers to and from the petroleum price stabilization fund effective March 11, 2015**

|No.|Unit|92 RON gasoline<br>liter|Diesel fuel<br>liter|Kerosene<br>liter|Fuel oil<br>Kg|
|---|---|---|---|---|---|
|1|FOBper unit|US$0.46|US$0.46|US$0.46|US$0.35|
|2|CIFper unit|US$0.47|US$0.48|US$0.48|US$0.38|
|3|CIFper unit in local currency|D 10,019|D 10,175|D 10,144|D 8,073|
|4|Import duty|35%|30%|35%|35%|
|5|Excise tax(on 3+4)|10%|0%|0%|0%|
|6|Profits and other costsper unit|D 1,350|D 1,250|D 1,250|D 900|
|7|Stabilization fund levy per unit|D 300|D 300|D 300|D 300|
|8|Environment taxper unit|D 1,000|D 500|D 300|D 300|
|9|VAT (on sum of 3–8)|10%|10%|10%|10%|
|10|Basepriceper unit|D 19,281|D 16,805|D 17,099|D 13,638|
|11|Retailpriceper unit|D 17,280|D 15,880|D 16,320|D 12,760|
|10|Difference(11 ‐ 10)|‐D 2,001|‐D 925|‐D 779|‐D 878|
|11|Transfer from stabilization fund|D 1,852|D 888|D 837|D 927|
||Transfer in US$per unit|US$0.09|US$0.04|US$0.04|US$0.04|

_Source:_ <u>http://hiephoixangdau.org, modified to correct minor calculation inconsistencies.</u> _Note_ : Diesel fuel is the grade with 0.05 percent sulfur and fuel oil has 3.5 percent sulfur.

Each oil company keeps its own account of the transfers in and out of the stabilization fund, so that at a given time it is possible for the fund balance to be positive for some companies and negative for others, as reported in October 2013 ( _VietQ_ 2013). The balance of the fund as a whole has become negative in the past. For example, the balance in March 2013 was ‐D 430.9 billion, or ‐US$21 million (Vietnam News 2013). More recently, thanks to low world petroleum product prices in the last quarter of 2014, the fund balance surged to an all‐time high of D 4,019 billion (US$188 million). The balance, however, more than halved in the next six months. Large withdrawals during the first three months of 2015 decreased the balance to D 2,844 billion (US$132 million) and further to D 1,794 billion (US$82 million) by June 2015, before rising to D 2,776 (US$123 million) at the end of September 2015 (Vietnam 2015a–c).

The import duties (item 4) in Table 20 (lowered subsequently in April and May 2015) are for fuels imported from countries outside of those with whom Vietnam has trade agreements: ASEAN (Association of Southeast Asian Nations) Trade in Goods Agreement, ASEAN‐China, and ASEAN‐Korea. The duties in these trade agreements are lower, and in fact under the first agreement the import duties on kerosene, diesel, and fuel oil were eliminated on January 1, 2016 and that on gasoline will be eliminated in 2018. The government in March 2015 announced its intention to standardize import duties across all suppliers, without giving a timeline. Standardizing import duties would substantially diminish or even eliminate the government’s ability to smooth price volatility by adjusting import duties, which have at times been reduced to zero in the past in times of rapidly rising world oil prices. The import tariff reform will provide a further impetus to taking steps toward price deregulation.

Vietnam has struggled to combat fuel smuggling, given powerful financial incentives. The finance ministry issued a statement in March, announcing that the government would triple the environmental protection tax (item 8 in Table 20) from May 2015. In making the announcement, the finance ministry