Communist Vietnam will keep state subsidies on oil imports to fuel its fast-expanding economy despite a sharp rise in global energy prices, state media reported on Tuesday.
The move overrules a previously announced plan to liberalise pricing for oil products in the energy-hungry country this year.
"It will be hard but we should be able to afford it," Finance Minister Nguyen Sinh Hung was quoted by state media during a parliament meeting in Hanoi.
The state, which has a monopoly over fuel imports and controls retail prices, said last year it would cancel all subsidies to fuel importers from 2004.
But concerns over global supplies at a time when oil demand is seeing the biggest growth in 16 years has sent international benchmark crude oil prices soaring. US crude futures struck $41.85 a barrel this week, the highest in 21 years of trading and marking a rise of more than $9 since the end of 2003.
This year Vietnam, which exports crude but imports most of its refined products' needs, expects to buy 13 million to 13.5 million tonnes of gasoline and oil products, 12.5 percent more than in 2003 to feed energy demand growth of 17 percent per year.
The finance minister said the government had to spend 1,000 dong (six cents) per imported litre of gasoline or about one trillion dong per month ($63.6 million) to offset losses incurred by state fuel importers due to soaring global oil prices.
That amounts to a 10-fold jump from the same period last year when the monthly fuel subsidy averaged 100 billion dong.
Vietnam has set a target for its economy to expand 7.7-8.3 percent compared with a year earlier for the remaining three quarters of 2004. Gross domestic product rose seven percent between the first quarter of 2003 and 2004.
Meanwhile, the finance ministry forecast that exports of crude oil in 2004 would contribute 25.82 trillion dong to state coffers, up 12 percent on 2003 and accounting for around 17 percent of the annual state revenues.