How to manage the petroleum market effectively?

	Creating a healthy and competitive environment for petroleum business
	Proposing to increase competition in the petroleum trading market
	Be careful when changing fuel pricing formula

Businesses need to sit down and raise issues together to move towards policy change. Photo: T.D

Necessary to clarify the root cause of the fracture

2022 was a tumultuous year globally as the impact of the Covid-19 pandemic, along with the war in Ukraine, caused difficulties for businesses. For the petroleum industry, this is a year of many fluctuations with unprecedented developments when the oil price increased sharply in the first months of the year and then suddenly dropped, so the transportation and import of goods faced many difficulties, causing enterprises in the sector to suffer heavy losses.

The problem of supply disruptions, gasoline prices skyrocketing, gasoline running out, and stations being closed, discounts, businesses making losses, market managers checking gas stations are words that are continuously used by press agencies in articles to reflect the situation of the domestic petroleum market.

Supply is difficult, and retail businesses suffer heavy losses, leading to a shortage of petroleum supply in some provinces and cities across the country. In Hanoi and many other localities, people have to drive their cars to many stores to buy gasoline or can only fill up with 50,000 VND/motorcycle or 200,000 VND/car.

After the management agencies offered a series of solutions, from increasing supply, adjusting costs, and strengthening supervision of business and market activities, the situation gradually stabilized. However, many new issues need to be corrected.

The Ministry of Industry and Trade, the Ministry of Finance and businesses need to prevent petroleum supply disruptions as well as solve the problem of ensuring national energy security. This is a very urgent issue in the context of the draft amendments to Decree 95 and Decree 83 on petroleum business being consulted on.

At the seminar, Mr. Hoang Trung Dung, General Director of Additives and Petroleum Products Development Joint Stock Company (APP), said that in the period of 2018-2021, including two years of Covid-19, business activities of distribution were good and still responded well to the market.

However, in 2022, the first blow was the Ukraine war, the situation began to be more difficult, and the fracture took place locally.

In essence, key traders are also formed under Decree 83, and must meet all statutory conditions to be granted an operating license.

However, according to the retail business, distribution traders are intermediaries, causing disruptions and increasing costs. “If the distribution trader is really the middleman, the cause of the fracture, then I think it should be cut. What is the root cause of the fault? In fact, distribution traders are the ones to blame,” M.r Dung said.

“I assess that there are only three transparent leading enterprises, however, the remaining dozens of leading enterprises are not clear about losses or profits. I request the Ministry of Industry and Trade and market management agencies to show how to handle speculation. I confirm the situation of speculation, hoarding goods to wait for the price increase to sell. Please ask the market management agency to publicize the number of retail businesses and distribution traders hoarded goods in 2022,” said Mr. Hoang Trung Dung: Is the cause of the break due to retail and distribution? We are distribution traders, if we lose, what should we do? The fact that if enterprises lose money for two years, the directors have to quit. If they continue to lose, the bank will not continue to lend.

Regarding the adjustment cycle, in the past, when the cycle was 15 days, the situation was relatively stable. However, when reduced to 10 days, the fault occurs locally, the connector does not have enough time to operate, leading to the bottom fault.

Before and after 2 days of the cycle is very stressful, with long queues for gas, everyone wants to get the goods quickly but there is no supply. In the future, the cycle is heading towards 7 days. The continued shortening makes the fault more serious, making it impossible to get goods to meet market demand.

Regarding the petroleum fault, Mr. Do Thanh Han, Director of Saigon Petroleum Joint Stock Company (Saigon Petroleum), said that the main reason leading to the breakdown of petroleum is the price. Petrol prices need to be calculated correctly, fully and timely in all three stages from the focal point, distribution, and retail. However, we just take the price of 6 months ago to apply for 6 months. This is against the law while gasoline is a commodity that fluctuates very quickly from day to day and hour to hour.

Mr. Do Thanh Han suggested that the Ministry of Industry and Trade - Finance make timely adjustments. Because just now, the authorities have just calculated the base price at the focal point, not counting the circulation price. In addition, in the process of amending Decree 95, it is necessary to amend it in a comprehensive and synchronous manner. Because the previous two decrees are only about gasoline, there are related issues that have not been mentioned such as labor, environmental issues, fire prevention, and traffic, etc.

Should not dissect responsibility

According to Dr. Nguyen Dinh Cung, former director of the Central Institute for Economic Research and Management, up to now, the parties should not dissect responsibilities and blame each other for the uncertain capital market. Retailers cannot blame importers and suppliers of petrol and vice versa.

The continuous inspection and examination with the current petroleum business only make the market harder. The State should not let businesses suffer losses through administrative interference, or through mechanisms and policies. Therefore, businesses need to sit down and raise issues together to move toward policy change.

Director of Price Management Department, Ministry of Finance Nguyen Minh Tien said that the Ministry of Industry and Trade has consulted when amending the decree on petroleum trading. When amending the decree, state management agencies closely participate to ensure stable petroleum business activities, without any interruption in supply.

“On the basis of the costs of distribution merchants, we guarantee the principle of correct and sufficient calculation. We review the standard costs in the cost basis formula on an arising basis. We continue to research and review so that the steps in calculating the base price are disclosed to businesses,” said Mr. Tien.

The unit in charge of drafting the draft revised Decree on petroleum business, Mr. Tran Duy Dong, Director of the Domestic Market Department (Ministry of Industry and Trade), emphasized that comments on amending Decree 95 and 83 will be accepted.

Pursuant to the leader of the Domestic Market Department, the Ministry of Industry and Trade that amending the decree is not hasty, needs to fix the basis, long-term, more market-oriented to reduce difficulties for state management agencies, because the resources of the State are limited that cannot follow the rapid changes of the market.