Global oil price pressures Vietnam to lift controls

By Grant McCool

HANOI, June 20 (Reuters) - Vietnam, which risked an inflation hit by raising fuel prices in February, is under pressure from near $140 oil to scrap three-month long price controls, but there are few indications from the government about its plans.

The government said on June 10 it would keep gasoline and diesel prices unchanged for now but indicated it would increase retail prices if world oil prices jumped over $150 per barrel.

In late March, with several consecutive months of double-digit inflation straining the developing economy, the Communist Party government imposed controls on 10 "essential" commodities -- petrol, electricity, coal, water, cement, steel, school and hospital fees, bus, rail and air travel.

"We are working on a roadmap for managing the prices of those 10 commodities, we will let the market know very soon," Nguyen Ngoc Anh, deputy director general of the banking and finance department in the ministry of finance said on Thursday night.

Anh, one of several officials who took part in conference calls with international investors and reporters to try and ease concerns about measures to tame inflation that hit 25 percent in May and a tripling of the trade deficit, gave no more specifics.

Hanoi last hiked oil product prices by about 12 percent on February 25, with the retail gasoline price now standing at $0.90 per litre and diesel at $0.86 per litre.

Gasoline prices in the Southeast Asian country of 85 million have nominally been deregulated since mid-2007, but importers still need government approval when setting end-user prices and are effectively restrained from changing prices too often.

With the price curbs since late March, "Vietnam has effectively postponed its deregulation," said Victor Shum, analyst at Purvin & Gertz in Singapore.