Many petrol stations close because they are out of stock. Photo: TD.

Regulations on discounts in petroleum product business are not made by the State

Recently, the lack of petroleum products and closing of petroleum stations has occured in some localities. This issue has raised the question of why petroleum product suppliers have not yet ensured the supply, thereby causing a shortage of petroleum products and the closure of petroleum stations.

According to the Ministry of Finance, based on the functions, tasks and powers assigned by the Government's decree, the Ministry of Industry and Trade is in charge of managing petroleum products. The management of the petroleum wholesalers, distributors and retailers is under the Ministry of Industry and Trade and enterprises. The Ministry of Finance is responsible for promulgating cost norms for petroleum business and advising the Government to submit to the National Assembly taxes and fees for petroleum products.

On October 7, the Ministry of Finance issued an Official Dispatch answering the Ministry of Industry and Trade on the standard price of petroleum products. Accordingly, the ministry said that the State does not stipulate discounts in petroleum trading activities because this mainly depends on market supply and demand, fluctuation of world petroleum prices, petroleum inventories of key traders, and sales methods of the two parties.

If the world petroleum price decreases, it may affect the domestic petroleum price. If the petroleum traders have a large inventory, they can increase the discount for sales and vice versa. In addition, the discount may also depend on the sales policy and business capacity of wholesalers that the agent or general agent signs a sale contract.

The Ministry of Finance also said the opinion of the Ministry of Industry and Trade that the failure to adjust the domestic premium and the cost of transporting the petroleum products from the domestic petroleum refinery to the port, leading to the allocation of discount levels in the business system is limit ed, and many retailers do not have a discount to offset costs and maintain business operations, ensuring a continuous supply of petroleum to the market, is not consistent with current market developments.

Therefore, the Ministry of Finance has requested the Ministry of Industry and Trade to evaluate and clarify the causes of difficulties in the source of the goods, and review the petroleum distribution system, and the intermediaries system to provide an appropriate and cost-effective solution; direct petroleum product traders to ensure domestic petroleum supply in all situations.

The Ministry also proposed the Ministry of Industry and Trade to study a plan to reduce the provisioning rate and combine the use of the Petroleum Price Stabilization Fund (if necessary) to adjust the domestic premium and the cost of transporting the petroleum products from the domestic petroleum refinery to the port to not affect the base price of petroleum during the petroleum price management period.

Plan on seeking for goods source need to be implemented

Currently, there is an opinion that the petroleum price management authorities only focus on keeping stable petroleum prices and do not pay attention to the interests of petroleum enterprises. Commenting on this issue, economic expert Ngo Tri Long expressed disagreement and said that this opinion is inappropriate and does not cover all aspects.

According to Mr. Ngo Tri Long, in fact, when the costs of enterprises increase, the State management agency revised up the normative costs related to imported petroleum sources since the price management period on October 11, 2022.

Accordingly, price management period, due to a surge in the world petroleum price and the USD/VND exchange rate, a number of petrol and oil trading costs were revised up slightly by the Ministry of Finance, so the base price surged from VND560-1,979/liter. In order to support people’s lives and the production of enterprises, the Inter-Ministry of Industry and Trade decided to reduce the provisioning rate of the Price Stabilization Fund for diesel products to limit  the increase in retail petroleum prices in the country.

It is the State's sharing with businesses and consumers in the current context. Consumers also need to accept increases if world prices rise.

“I think that there have no major obstacles that need to be removed in the management of petroleum products. Decree 95/2021/ND-CP stipulates very clearly, we only comply with the Decree, the market will be stable. I also agree with the opinion that the current core issue is to ensure supply. The businesses also need to make plans to find suitable goods sources, and arrange effective corporate governance to reduce business operating costs. Recently, some petroleum sellers have delayed selling petroleum products due to the long price management cycle leading to a high difference between domestic and world prices. If we adjust the price management time faster, the petroleum market will operate more stably,” said expert Ngo Tri Long.

Economic expert, Assoc., PhD. Dinh Trong Thinh also suggested that the management agencies must re-check all production and import supply for the economy; firmly grasp data from the traders and prevent inaccurate reports, thereby balancing to ensure supply.

It is necessary to review the price mechanism, the management methods of the market and petroleum products to better manage the petroleum market; ensure that enterprises have profit norms in accordance with the State's regulations.