Need to continue maintaining the Petroleum Price Stabilization Fund

The Draft Decree replacing Decree No. 83/2014/ND-CP dated September 3, 2014 of the Government on petroleum trading and Decrees amending and supplementing Decree No. 83/2014/ND-CP with many contents is of interest to the petroleum business community, including the content on handling the balance of the Petroleum Price Stabilization Fund as well as the content on how the Petroleum Price Stabilization Fund will be operated in the coming time?

There needs to be a stepping stone before petrol and oil can be operated under a market mechanism. (Photo: CD)

Talking to reporters of the Industry and Trade Newspaper about this issue, Associate Professor, Dr. Dinh Trong Thinh - economic expert - said that, in fact, the Petroleum Price Stabilization Fund cannot be abolished at this time, for the following reasons:

Firstly , when world prices fluctuate, without this fund, domestic gasoline prices will increase, causing great pressure on inflation.

Second , although we have been able to produce gasoline ourselves, the domestic supply can only meet more than 40% of the demand. To abolish the Petroleum Price Stabilization Fund, we must be proactive and completely autonomous in the production and trading of petroleum so that we can be assured of safety and energy security. At that time, domestic gasoline prices will follow the market mechanism in the true sense, and domestic gasoline prices will closely follow world prices, then this Fund will be abolished.

However, the question is how to properly discharge the Fund in the near future? What is the management mechanism? What are the factors related to wholesale and retail business activities? For this, we need the regulatory role of the state management agency.

"I think the State needs to continue to improve the management mechanism of the Petroleum Price Stabilization Fund. First of all, it is necessary to take advantage of the effectiveness of issuing invoices for each sale and connect with tax authorities to provide full and transparent information in the use of this Fund," said Associate Professor, Dr. Dinh Trong Thinh.

Along with that, there should be specific regulations for setting up and using the Fund, ensuring timeliness and convenience in case of spending from the Petroleum Price Stabilization Fund but not affecting the capital of enterprises. In the long term, when the State has a national reserve infrastructure, it can consider using the Fund for petroleum reserves to intervene in the market when necessary.

In that context, the current drafting agency operating the Petroleum Price Stabilization Fund according to the provisions of the Law on Prices, in my opinion, is reasonable.

According to Associate Professor, Dr. Dinh Trong Thinh, petroleum is still an important strategic commodity for production and social security and is being strictly managed by the State, so it is necessary to be very careful in implementing management and business methods. In particular, it is necessary to develop a response scenario for emergency situations such as supply disruptions or extreme price fluctuations.

In the latest draft Decree, the Ministry of Industry and Trade did not abolish the Petroleum Price Stabilization Fund. The draft stipulates that petroleum price stabilization is implemented in accordance with the provisions of the 2023 Law on Prices (effective from July 1, 2024) because the Law on Prices clearly stipulates the list of goods and services subject to price stabilization, cases of stabilization and measures for implementing price stabilization. The Ministry of Finance, the Vietnam Petroleum Association, the Government Inspectorate, the Ministry of Public Security, the Ministry of Justice, and the State Bank have comments on the announcement of petroleum prices; the mechanism for regulating petroleum prices; handling the balance of the Petroleum Price Stabilization Fund; funding sources for purchasing information on world petroleum product prices as a basis for key traders to calculate; tasks when receiving the transfer from the Ministry of Finance.

Minister of Industry and Trade Nguyen Hong Dien emphasized that petroleum is a strategic commodity, along with gas and electricity, considered the "bread" of the economy. Therefore, petroleum has been identified as a conditional business commodity in legal documents up to now. "The condition here is how to ensure both the market mechanism and the State management mechanism. In other words, operating according to the market mechanism, with State management in a socialist orientation" - Minister Nguyen Hong Dien shared.

Regarding the handling of the balance of the Petroleum Price Stabilization Fund, according to the plan stated in the Draft Decree replacing it, Minister of Industry and Trade Nguyen Hong Dien stated that the Petroleum Price Stabilization Fund is a financial fund that is not included in the state budget balance, and cannot be arbitrarily transferred to the state budget or used for other purposes. Therefore, the Petroleum Price Stabilization Fund must be maintained according to the Law on Prices. In case the market price level of petroleum products fluctuates abnormally, causing a major impact on the socio-economy, the Government will be reported to consider and decide on the price stabilization policy, and the budget will be allocated for stabilization and support. Under normal conditions, businesses will balance themselves, and everything will operate according to the market.

Source: https://congthuong.vn/pgsts-dinh-trong-thinh-can-tiep-tuc-duy-tri-quy-binh-on-gia-xang-dau-350151.html