What is the basis for proposing that businesses decide their own gasoline prices?

The Ministry of Industry and Trade said that currently, the price of gasoline is the maximum price periodically announced by the State based on the basic gasoline price formula. According to this mechanism, the State issues criteria, price calculation formulas, price calculation parameters, intervening too deeply in the price decisions of enterprises.

"In order to completely reduce the intervention of state agencies in deciding on selling prices of enterprises, create a competitive environment on gasoline prices according to market mechanisms, help enterprises flexibly and autonomously decide on gasoline prices on the market, the draft Decree approaches in the direction that the State only announces world gasoline prices and some fixed costs. Traders self-announce the maximum selling price based on the price formula prescribed by the State. The selling price of gasoline on the market of enterprises must not be higher than the maximum selling price according to the prescribed formula. After announcement, traders notify the selling price to state agencies for monitoring" - the Ministry of Industry and Trade proposed.

The formula for gasoline prices is consulted as follows:

The State announces the average world price every 15 days. The main traders of petroleum based on fixed factors such as taxes of all kinds, are entitled to add the standard cost prescribed in the Decree to announce the selling price of petroleum on the market. The selling price of petroleum of the main traders of petroleum on the market must not exceed the price calculated according to the formula:

Maximum selling price of gasoline is equal to (=) {World gasoline price (x) foreign exchange rate} plus (+) import tax plus (+) special consumption tax plus (+) environmental protection tax plus (+) value added tax plus (+) ratio of business expenses and profits of the enterprise.

In there:

- The maximum selling price of gasoline is the highest selling price announced by the main gasoline trader.

- World oil price is the average world oil price for 15 consecutive days.

- Foreign exchange rate is the exchange rate between Vietnamese Dong and US Dollar sold at the end of the day by the Joint Stock Commercial Bank for Foreign Trade of Vietnam, calculated on average for 15 days according to the number of days with world oil prices.

- The ratio of business costs and profits of an enterprise is calculated according to the following maximum levels:

Maximum is …% (for example 20%) in case the average world oil price for 15 days reaches … USD/barrel (for example 30 USD/barrel);

Maximum is …% (for example, 10%) in case the average world oil price for 15 days reaches above … USD/barrel to … USD/barrel (for example, 30 USD/barrel to 60 USD/barrel);

Maximum is …% (for example 07%) in case the average world oil price for 15 days reaches above … USD/barrel to … USD/barrel (for example 60 USD/barrel to 90 USD/barrel);

Maximum is …% (for example 05%) in case the average world oil price for 15 days reaches above … USD/barrel to … USD/barrel (for example 90 USD/barrel to 120 USD/barrel);

Maximum is …% (for example 04%) in case the average world oil price for 15 days reaches above … USD/barrel (for example 120 USD/barrel).

- Import tax, special consumption tax, environmental protection tax, value added tax are implemented according to tax laws.

In case the ratio of business costs and profits of enterprises increases, the Ministry of Industry and Trade shall preside over and coordinate with the Ministry of Finance to report to the Prime Minister to consider adjusting the ratio of business costs and profits of enterprises in accordance with the actual situation.

Petroleum traders shall base on the above price calculation formula to calculate and announce the selling price of petroleum in the system not exceeding the maximum selling price.

In addition, the Petroleum Price Stabilization Fund is used regularly and continuously according to current regulations. However, the Party's inspection and examination agency has commented that the current practice of setting up and using the Petroleum Price Stabilization Fund is done regularly and continuously without a specific time, which is not in accordance with the provisions of the Law on Prices.

The Ministry of Industry and Trade believes that a new mechanism is needed to replace the current price management mechanism, and this mechanism needs to be publicly and transparently demonstrated so that petroleum businesses can forecast and decide to self-announce prices according to the law. This is also the management mechanism that many countries in the world and in the region are applying.

Source