Petroleum distributors claim self-determination in pricing policy

VietNamNet Bridge – Petroleum enterprises have launched a new campaign to ask for the right to determine the retail petrol prices themselves, saying that the market rules need to be applied in a market economy.

petrol, MOIT,  distributors, import tariff, dollars

Currently, petroleum has to get approval from the Ministries of Finance and Industry and Trade for their suggestions of raising the petroleum retail prices. The “ask-and-grant mechanism, of course, has not satisfied them, and they have been taking every opportunity to demand for the right to determine the prices themselves.

And a new opportunity has come. The Ministry of Industry and Trade has submitted to the Prime Minister a draft decree on petroleum trade management which comprises of two noteworthy regulations 1) petroleum enterprises can adjust the petroleum prices under the supervision of competent agencies, if the price adjustments are between 0-5 percent; and 2) the price would be determined after considering the world’s and regional prices during 15 consecutive days.

In fact, by releasing the Decree No. 84 some years ago, the government decided to float the retail petroleum market. However, the decree has not been respected, while enterprises still to get the nod from management agencies anytime when they plan the price adjustments.

Therefore, the director of a petroleum enterprise said he cannot see big differences between the Decree No. 84 and the drafted decree. The biggest amendment is that if the new regulations come out, enterprises can make the price adjustments, if the price increases/decreases are not higher than 5 percent in comparison with the previous prices instead of 7 percent.

The director said the government should loosen the management over the enterprises’ pricing policy and let the market’s supply and demand decide how high the prices should be.

However, experts, reasoning the monopoly, have voiced their protests against the idea of floating the petroleum market and letting petroleum enterprises determine the prices.

Ngo Tri Long, a well-known economist, said the “group monopoly” now exists on the petroleum market. Petrolimex alone holds 60 percent of the market share, which brings it the opportunity to dominate the market.

Long stressed that it would be contrary to the market rules if allowing petroleum enterprises to determine the selling prices, because the market is not competitive enough.

He has warned that the enterprises would make the corrupt use of the regulations to raise the retail prices spontaneously, thus making consumers suffer.

This happened many times in the past. Enterprises raised the selling prices very sharply as soon as the world’s price increased, but they deliberately delayed the price decreases when the world’s price decreased.

Some economists, citing the Price Law which took effects on January 1, 2013, called on the government to apply the ceiling price mechanism. This would come in line with the law, which stipulates that the State will control the prices of some categories of products, including petroleum, with its special instruments – setting standard price, ceiling price, floor price and price frame.

The economists complained that people lack necessary information to supervise the petroleum pricing. The information about the world’s prices, to which the government refers to when checking the domestic prices, have been provided by petroleum enterprises, which cannot be recognized by independent agencies.


petrol, MOIT, distributors, import tariff, dollars