The Vietnam Chamber of Commerce and Industry (VCCI) has just provided comments to the Ministry of Industry and Trade on the Draft Decree on petroleum trading. In particular, VCCI has given many opinions related to the mechanism of petroleum prices, investment and business conditions, circulation reserves...

Regarding the mutual trading of distributors, VCCI cited Article 17 of the Draft stipulating the rights and obligations of petroleum distributors, which does not allow distributors to trade petroleum with each other.

According to the argument of the Ministry of Industry and Trade, if traders are allowed to distribute and trade gasoline among themselves, it will lead to round-trip trading, through many intermediary levels, pushing gasoline prices up.

However, VCCI emphasized that this argument is baseless and goes against market rules.

Parties in the wholesale petroleum market tend to prioritize buying from distributors with lower prices. VCCI assumes that there is a source of cheap goods, but because they are bought and sold through many intermediaries, causing the selling price to increase, buyers will go to the source of the goods to be able to buy at a cheaper price.

W-gasoline.png
Many people disagree with the ban on traders distributing and buying and selling each other's gasoline. Photo: Minh Hien

Accordingly, any distributor who sells at a high price will be eliminated from the market because they cannot compete with other wholesalers and distributors who sell at a lower price.

Previously, Decree 83/2014/ND-CP and Decree 95/2021/ND-CP stipulated a 1:1 distribution system, meaning that retailers were forced to depend on distributors. In that case, if the distributor increased its selling price, retailers could not switch to another supplier and were forced to pay higher prices.

However, Decree 80/2023/ND-CP has allowed retailers to import goods from multiple sources. Competition in the wholesale market has increased, so the above situation no longer occurs, VCCI stated.

Some opinions say that allowing traders to distribute and buy and sell gasoline to each other could make the reported data on gasoline reserves inaccurate.

However, according to the draft, the obligation to reserve for circulation does not apply to distributors. Therefore, VCCI proposed that the drafting agency amend it to allow distributors to buy and sell gasoline with each other.

Regarding the above issues, at the discussion "For the stable, transparent and effective development of the petroleum market" on the morning of July 30, Mr. Bui Ngoc Bao - Chairman of the Vietnam Petroleum Association - affirmed that distributors are an important link in the circulation of goods. They are not intermediaries pushing up the price of petroleum.

According to him, there are many distributors that are larger than the main business, not that the distributors are smaller than the main business. Therefore, the type of distributors should not be limited.

"Since it is a market, where distributors buy and where they sell is up to them," Mr. Bao emphasized.

Expressing disagreement with the draft Decree requiring distributors to only buy from wholesale traders, Mr. Bao added that wholesale businesses do not always have enough quantity of goods at reasonable prices in each region and at each time.

The Chairman of the Vietnam Petroleum Association suggested that there should be regulations allowing traders to distribute and buy and sell from each other and to set the ratio. For example, 50-70% can be freely purchased from the main enterprise, the remaining 30% can be bought and sold from each other. Because this is the business of regulating the market.

“If the market fluctuates abnormally, the amount of goods will be adjusted from traders distributing more goods to traders distributing less. Therefore, the proposal that traders distributing goods should not buy from each other is something that needs to be carefully considered and evaluated,” Mr. Bao suggested.

VCCI proposes to consider 2 options for gasoline price mechanism

Option 1 allows businesses to decide on their own selling prices (no ceiling price), along with regulations on public and transparent prices for consumers to choose from, such as: posting prices in a high, large, clear location so that passersby can see clearly without having to turn into the gas station; declaring prices on a common information portal and making them public immediately so that consumers can compare prices between gas stations online.

In addition, state agencies regularly monitor market developments to detect violations of the Competition Law, such as abuse of monopoly position, dominant position (unreasonably high selling prices, Article 27 of the Competition Law) or agreements to restrict competition (collusion to fix prices, Article 11 of the Competition Law).

Option 2 : Eliminate price declaration procedures, or exempt this procedure when enterprises sell goods at the ceiling price as prescribed in Article 34 of this Decree.

Gasoline prices follow market mechanisms, users will benefit . Amendments to gasoline management policies in the coming time must focus on changing to market mechanisms, instead of using administrative orders.