The new fees will be VND3,000 per liter of gasoline, VND1,500 per liter of diesel and VND900 per kg of heavy fuel oil, up from VND1,000, VND500 and VND300 respectively. The fee on kerosene remains unchanged at VND300 per liter.

Minister of Finance Dinh Tien Dung explained earlier that the environmental protection fee spike is to offset the impact of dropping oil prices and import tariff reductions as Vietnam’s commitments to trade agreements with foreign countries on the State budget collections.

According to the ministry, the State budget could lose some VND28.25 trillion (US$1.32 million) a year in 2015-2017 if the price of WTI crude oil is US$70-75 per barrel and annual fuel imports total 7.1 million tons like last year in the period.

After the adjustment, the total environmental protection fee collection is estimated at VND35.58 trillion per year, increasing by VND23.72 trillion, and the value-added tax revenue will rise by VND2.37 trillion, contributing a total of some VND26.09 trillion to the State budget this year.

The ministry said higher environmental protection fees will not leave much impact on retail fuel prices on the domestic market owing to lower import tariffs and declining world oil prices. The environmental fee rise is expected to prevent fuel smuggling.

If the world oil prices edge up, the ministry will adjust down import tariffs on fuels, which are 35% for gasoline, kerosene, and heavy fuel oil and 30% for diesel. Taxes and fees now accounted for 35- 40% of fuel prices.