Ministry of Industry and Trade proposes that businesses decide on their own gasoline prices

Key enterprises can decide on their own gasoline prices, the State only announces the average world price every 15 days, according to the proposal of the Ministry of Industry and Trade .

The proposal was made by the Ministry of Industry and Trade in a report to the Government on a draft new decree, replacing previous decrees on petroleum trading.

According to current regulations, the State sets the base price to be the basis for regulating retail prices of gasoline and oil. That is, the price announced by the State is like the ceiling price for businesses to determine their own retail prices in the system. For example, in the regulation period on March 28, the State announced that RON 95-III is 24,816 VND per liter, then businesses cannot sell higher than this level.

However, in the new decree, the Ministry of Industry and Trade proposed that the State not regulate gasoline prices, but instead announce the average world price for 15 days and some fixed costs (foreign exchange rates, business costs and profits of enterprises, taxes and fees). Based on this data, key enterprises will set their own maximum selling prices. Retail prices to consumers must not be higher than this maximum level.

"This regulation aims to reduce State intervention in businesses' pricing decisions," the Ministry of Industry and Trade said.

This agency believes that allowing key enterprises to decide their own selling prices will help them compete on costs, eliminating the current practice of applying separate gasoline prices in urban and rural areas.

In case the ratio of business expenses and profits of enterprises increases, the Ministry of Industry and Trade shall coordinate with the Ministry of Finance to report to the Prime Minister for consideration and adjustment in accordance with reality. The adjustment shall be made periodically every 15 days.

Previously, the proposal to allow businesses to decide on their own gasoline prices was raised by experts in early 2023, when they commented on amending a number of articles of Decrees 95 and 83 on gasoline trading.

Gas station staff on Phan Xich Long Street (HCMC) prepare to adjust gasoline prices, November 2023. Photo: Thanh Loc

Regarding the Petroleum Price Stabilization Fund, according to the Ministry of Industry and Trade, there are opinions that the establishment and use of this fund is not in accordance with the Law on Prices. Therefore, they proposed to build a new mechanism to replace the current regulations, so that businesses can forecast and announce prices according to regulations.

"The new decree will specifically regulate the cases of fund allocation and use," said the Ministry of Industry and Trade.

The current petroleum distribution system has many types, including wholesale traders, distributors, retail agents, and franchisees. According to the Ministry of Industry and Trade, the number of petroleum distributors has increased rapidly in recent times, creating more sources of goods for retail businesses, diversifying the system, but also causing problems.

For example, the regulation allowing distributors to buy from each other has made it difficult to control the supply. In fact, the disruption of the gasoline supply in 2022 shows that many distributors and traders buy and sell gasoline in a circular manner, causing the supply to be disrupted.

Therefore, in this revision, the Ministry of Industry and Trade plans to tighten the management of the petroleum distribution system. In particular, distributors can only buy petroleum from the main distributors and cannot buy and sell to each other.

For retail businesses, the new draft proposes three forms, including retailing gasoline for key businesses or distributors; receiving the right to retail gasoline or purchasing gasoline from key businesses or distributors to retail at stores.

The Ministry of Industry and Trade also plans to tighten management of key enterprises. For example, they will have to ensure a minimum total source of gasoline and oil of 100,000 m3/ton per year. This regulation aims to tighten the situation where many key traders are granted licenses but do not implement or are given preferential treatment in not having to implement the import quota allocation.

The focal points will have to connect business data and petroleum warehouses when renting warehouses with the Ministry of Industry and Trade. It is expected that they will have 24 months to prepare and do this after the new decree takes effect.

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