After a series of violations by key enterprises, many experts believe that it is time to regulate the gasoline market with taxes and fees, instead of the Stabilization Fund.
The Ministry of Industry and Trade is seeking opinions on drafting a new Decree on petroleum trading, in which the issue of keeping or abolishing the Petroleum Price Stabilization Fund is being discussed by many businesses and experts.
The price stabilization fund is collected through retail gasoline prices, which are money paid by people, with the aim of stabilizing prices. Spending is done when the base price is higher than the current retail price, or when the price increase affects socio-economic development.
A gas station employee on Phan Xich Long Street, Phu Nhuan District, Ho Chi Minh City pumps fuel for a customer. Photo: Thanh Loc
Dr. Nguyen Duc Do (Academy of Finance) said that the price stabilization fund was established with the purpose of stabilizing prices, curbing sudden increases, and avoiding negative impacts on the economy and people's lives. The shortcomings do not come from this purpose but from the lack of transparency and unpredictability because the fund's withdrawals and disbursements do not follow any formula. In fact, for this reason, in the 5 years from 2017-2021, the Ministry of Industry and Trade - Ministry of Finance spent VND1,142 billion on price stabilization when prices had not increased and spent VND318 billion on price stabilization higher than the price increase, according to the conclusion of the Government Inspectorate.
Concerned that "this is an opportunity for businesses to misappropriate capital, creating many negative aspects in financial management but the effects are unclear", Mr. Giang Chan Tay, director of a retail business, said when commenting on the new Decree that he proposed to eliminate this fund.
Many experts agree with the proposal to abolish the Stabilization Fund, especially after a series of violations by key enterprises related to this fund were recently announced.
Last week, the Chairwoman of Hai Ha Waterway Transport Company Limited (Hai Ha Petro) Tran Tuyet Mai was arrested on charges of misusing the Petroleum Price Stabilization Fund. Ms. Mai directed her employees not to deposit the amount set aside for the price stabilization fund into their deposit accounts as prescribed, and used the price stabilization fund money in violation of regulations, causing a loss of over VND317 billion in state assets.
However, Hai Ha Petro is not the only unit that violated regulations. According to the conclusion of the Government Inspectorate, 7/15 petroleum centers misused the price stabilization fund, did not transfer the money to the fund account but left it in the enterprise's payment account for many periods before returning it with the amount of 7,927 billion VND.
In addition to Hai Ha Petro, two other key enterprises, Thien Minh Duc Group and Xuyen Viet Oil, also had their files transferred to the investigation agency to review and handle violations related to the use of the Petroleum Price Stabilization Fund.
Explaining the cause of the series of violations, economic expert Vu Vinh Phu said that the problem is that the money deducted from the fund belongs to consumers but the fund is managed by businesses, and the authorities decide how to use it. "It is the loose management and operation of the fund that creates opportunities for businesses to misappropriate it," Mr. Phu commented.
At the same time, many experts believe that the Petroleum Price Stabilization Fund can no longer perform its price stabilization function, and this fund should be abolished to gradually implement a market mechanism for petroleum.
Associate Professor, Dr. Pham The Anh (National Economics University) assessed that this stabilization fund does not help consumers reduce costs because in essence, this is still money that people advance into the fund and will be returned in the following operating periods to reduce fluctuations when prices increase. In case the world price fluctuates too much, Mr. The Anh said that whether or not there is a fund does not have much effect because the fund's release level is insignificant.
Regulatory tools such as taxes and fees, and in-kind petroleum reserves are also mentioned by experts to replace the Price Stabilization Fund in cash .
An expert in the petroleum sector, Mr. Phan The Rue, said it is time to boldly change and reform the management mechanism, so that petroleum prices follow the market. If the government wants to compensate for losses and prices, he said, it can intervene through tax and fee tools. When petroleum prices increase sharply, the government can completely reduce taxes and fees, which currently account for 45% of the current petroleum price structure.
Regarding oil and gas reserves, Associate Professor Dr. Pham The Anh said that currently, all countries have switched to this form of reserve, only Vietnam reserves using the Price Stabilization Fund. Sharing the same view, expert Phan The Rue also paid attention to forecasting supply and demand, increasing the ability to reserve oil and gas in kind, instead of using the fund contributed by the people as a tool to adjust prices. "If this problem is not solved, oil and gas supply will always be in a passive state," Mr. Rue emphasized.
Regarding the strategic petroleum reserve, many experts agree that in the coming time, Vietnam's demand for petroleum will also increase, so the national petroleum reserve must also be increased to a corresponding level. The strategic petroleum reserve will help stabilize the market and avoid the risk of supply disruption.
In 2022, the supply of petroleum products will be partially disrupted. According to the Ministry of Finance, to date, the national petroleum reserve has only reached about 9 days of net imports, and there is no national crude oil reserve. This figure is much lower than the Government's orientation. Decision 861 in 2023 aims to ensure the country's crude oil and petroleum product reserve capacity reaches 75-80 days of net imports, striving to reach 90 days of net imports.
In case the Government still wants to maintain the Petroleum Price Stabilization Fund, Dr. Nguyen Duc Do expressed that there must be measures to ensure the fund operates transparently. The measures mentioned by Mr. Do are that the fund allocation must follow clear rules, for example, what threshold level of fluctuation is required to set aside and use the fund.
He also recommended that there should be a centralized management unit to avoid the situation where many agencies participate in management (Ministry of Finance presides, Ministry of Industry and Trade coordinates), leading to shirking of responsibility, loose management, affecting the efficiency of use as recommended by the Government Inspectorate. At the same time, the Government needs to have a monitoring mechanism to ensure transparency, publicity, and avoid loss and misappropriation of people's money.
Expert Pham The Anh said that the Price Stabilization Fund should only operate in special situations when the government wants to subsidize businesses and consumers. However, he noted that this fund can be formed from excess revenue from petroleum-related revenues. "Vietnam is a crude oil exporting country, so the sudden increase compared to the budget revenue plan from this commodity can be deducted to put into the stabilization fund without affecting the budget estimate," he suggested.
Phuong Dung
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