Research on abolishing the fuel price stabilization fund.

This issue has existed for many years but has not been addressed promptly, coupled with the shirking of responsibility and lax management, affecting the effectiveness of the Fuel Price Stabilization Fund.

The inspection results dated January 4, 2024, by the Government Inspectorate show that the Ministry of Industry and Trade had not promptly provided feedback to amend and supplement the method for determining the level of contributions and expenditures from the fund per unit of output when stabilizing prices according to Joint Circular No. 39/2014/TT/BCT-BTC regulating the method of calculating base prices; the mechanism for forming, managing, using the fund and managing gasoline and diesel prices as stipulated in Decree 83/2014/ND-CP and Circular No. 103/2021/TT-BCT. This resulted in the Ministry of Industry and Trade and the Ministry of Finance deciding on the level of contributions and expenditures from the Gasoline and Diesel Price Stabilization Fund from 2017 to 2021 without a legal basis.

Specifically, the inter-ministerial committee decided to spend over 1.142 billion VND on price stabilization before the price increase and 318 billion VND on price stabilization exceeding the price increase; during the price adjustment period from January 1, 2017 to before 3 PM on April 23, 2018, unclear price adjustment documents were issued, leading to 19 out of 27 petroleum trading companies incorrectly allocating over 1.013 billion VND to the Price Stabilization Fund for Ron 95 gasoline and spending over 679 billion VND from the fund.

Furthermore, due to the shirking of responsibility by the agencies managing the Fuel Price Stabilization Fund; the lack of regulations and coordination mechanisms in management; and the slow handling of violations related to the fund by fuel wholesalers, 7 out of 15 fuel wholesalers misused the fund for price stabilization purposes. They did not transfer the funds to the fund's account but left them in their company's payment accounts for many periods before returning the funds, totaling over 7,927 billion VND. Of these, 3 out of 7 fuel wholesalers had been fined by competent state agencies three or more times for administrative violations. Three fuel wholesalers also allocated and spent the fund on quantities of fuel exceeding those recorded in their books, resulting in incorrect allocations of over 4.7 billion VND and incorrect spending of over 22.5 billion VND.

The management and use of the Fuel Price Stabilization Fund in recent times has not been effective. The Fund operates on the principle of pre-allocation and subsequent expenditure through price adjustments, which has not helped lower fuel costs. While other countries have switched to stockpiling fuel, Vietnam has been using the Price Stabilization Fund, and the consequences were predictable.

On the other hand, to ensure the efficient operation of the petroleum market and prevent supply disruptions, in addition to maintaining reserves of petroleum products, it is necessary to re-establish a petroleum market where businesses have autonomy in accounting. Simultaneously, it is necessary to reduce the number of intermediaries and move directly from supply to retail to minimize costs and increase competitiveness in the market.

As can be seen, the Fuel Price Stabilization Fund is collected through retail fuel prices; it is money contributed by the people with the goal of stabilizing prices. Expenditures are made when the base price is higher than the current retail price, or when price increases affect socio -economic development.

However, in reality, there have been instances where the fund's operation lacked transparency, creating loopholes for some businesses to misappropriate capital, leading to numerous negative practices in financial management and causing market instability.

Therefore, in the long term, the State needs to study the possibility of abolishing this fund so that the domestic petroleum market can operate according to market mechanisms and gradually approach world market prices.

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