Make Enterprises the Foundation
In an interview with Lao Động, Mr. Văn Tấn Phụng - Chairman of Dong Nai Petroleum Trading Joint Stock Company - stated that the decree on the business of petroleum (currently being solicited for opinions) needs to be built in the direction of approaching the market, making enterprises the foundation, especially retail enterprises, as they are the subjects that suffer many disadvantages in the petroleum business system.
“The petroleum business system, including the stages of importation, distribution, and retail, in which the main enterprise has the task of creating sources and retailing within its own system, while the rest must sell through distribution merchants. Distribution merchants have the task of taking goods from main enterprises, selling to retail enterprises. Retail enterprises, when selling each drop of gasoline to consumers, need to have a discount of at least 1,500 VND/liter, avoiding the situation of selling at a loss, selling below the cost price” - Mr. Phụng said.
The leader of a petroleum distribution enterprise in Hanoi stated that the current situation of the petroleum market in Vietnam is that the input (purchasing) is based on market prices, in which the purchasing price is the Platt price at the Asian-Pacific market, paid in USD, foreign trade, and transportation method according to international standards. However, the output (domestic consumption) is decided by the state through decrees, circulars; the selling price is based on the formula to calculate the base price to determine and manage the maximum retail price.
“That is an inconsistency, therefore, it is necessary to change the mechanism of price management in the direction of the market, modifying the administrative mechanism to a market tool to self-regulate, creating equal competition among petroleum business enterprises” - the leader stated.
“With the new draft, Ministry of Industry and Trade intends to tighten it in the direction of allowing only the distribution unit to purchase from the main enterprise, not from each other” - the leader stated.
The rights and interests of business stages have not been distributed fairly
Mr. Nguyễn Xuân Thắng - Director of Xăng dầu Hải Âu Phát Joint Stock Company - stated that from the conference on building Decrees 83, 95 to 80 on petroleum business, it seems that the content of the decrees has been built based on the interests of petroleum main enterprises. This has led to consequences such as retail enterprises being squeezed for discounts, being occupied with costs, and their interests not being distributed according to the regulations; causing the petroleum market to be chaotic, unfair, and prone to breaking down.
The basic reason is that the rights and interests of the stages (including main, distribution, and retail) have not been distributed fairly and equally; the rights and interests have only been concentrated in one economic sector, which is the main enterprises. Therefore, Mr. Thắng proposed allowing the main merchant to set the wholesale price level one; allowing the distribution merchant to set the wholesale price level two and the retail price; and allowing the petroleum retail enterprise to decide the retail price.
“In the case where the state regulates the retail price, I propose that the domestic business cost and profit of all three stages be 3,000 VND/liter - 5,000 VND/liter, and the state issues a specific ratio of distribution for the three stages, clear, transparent, and through a supplementary circular replacing Circular 103 guiding the method of establishing, using, and managing the Petroleum Price Stabilization Fund, or specifying it in the new decree” - Mr. Thắng said.
Proposal to abolish the ceiling price
The draft decree on petroleum business is being solicited for opinions to introduce a new mechanism to manage the selling price of petroleum. Enterprises are allowed to decide the price of petroleum, but not higher than the ceiling price. The ceiling price is calculated based on the principle of total costs, including the cost of creating sources, the business cost, the profit margin, and taxes. Thus, according to this mechanism, the state will announce the component costs, and the enterprise will calculate the ceiling price itself, instead of the state announcing the ceiling price as it is now. However, according to the Vietnam Chamber of Commerce and Industry (VCCI), this mechanism only changes the form, not the substance of managing petroleum prices.
Therefore, VCCI proposed that the Ministry of Industry and Trade consider the option of allowing enterprises to decide the selling price (without a ceiling price), accompanied by regulations on transparency and openness of prices (by declaring prices on a common information portal and making them publicly available immediately) to enable consumers to compare prices between gas stations.
