Many distributors in Ho Chi Minh City have been increasing the price of cooking gas without permission from their suppliers, a violation of government regulations.
In the last few weeks many retailers in Phu Nhuan, Binh Thanh, and Go Vap Districts hiked the price of liquified petroleum gas (LPG) by VND4,000-VND6,000 (20-30 US cents) for a 12-kilogram cylinder.
They justified this by saying many companies increased prices in mid-April but refused to sanction a hike in retail prices.
“I don’t see any reason for increasing retail prices,” Hoang Anh, deputy chairman of the Southern Gas Sub-association, a member of the Vietnam Gas Association, said, adding that gas import prices have been falling.
Le Phuc Dai, general director of Dai Viet Energy Joint Stock Company (Vinagas), said companies reduced commissions for agents due to the increase in costs.
Saigon Petro Co Ltd too cut commissions for its agents, many of whom then increased prices. But it not only did not haul them up but also announced an increase in retail prices to legalize their action.
But other gas companies have warned their agents about possible penalties for unauthorized price increases.
The latest round of hikes is the seventh since February, which have taken the price of a 12-kg canister up from VND303,000 to VND382,000.
Some retailers, instead of hiking the price, now ask customers to pay transport costs. The director of a gas company said companies want to cut commissions for their agents since the latter enjoy high profits but are not strong enough to do it.
The director of another company said retailers have a margin of nearly VND40,000 per cylinder.
But an analyst said gas companies do not have any leverage with their retailers since they do not know costs at lower levels. As a result, retail prices are controlled by retailers rather than the companies, he said.
It is also unclear why different brands cost different prices when they all have the sources of supply, cylinders, and components. For instance a 12-kilogram bottle of SP gas costs VND382,000 while for Saigon Gas it is VND388,000 and for Shell GAS, VND424,000.