Removing the 'bottleneck' for the petroleum market

Although the Government has made many changes to mechanisms and policies towards a market economy, petroleum trading has not yet achieved the expected results. Many opinions have proposed that it is necessary to build a physical petroleum trading floor to effectively manage and operate the petroleum market. Reporters of Tin Tuc newspaper discussed this issue with Associate Professor, Dr. Dinh Trong Thinh.

Associate Professor, Dr. Dinh Trong Thinh, economic expert.

Sir, the “bottleneck” in the Decrees on petroleum business is still the administrative mechanism of price management. What do you think about establishing a physical petroleum exchange to increase publicity and transparency?

The physical petroleum trading floor is where key enterprises, retailers, petroleum distributors, and retail enterprises trade in petroleum, publicly disclose prices and volumes, and minimize risks; create equal opportunities for business entities, lower petroleum prices, and benefit consumers, due to pricing that is close to the import source.

The petroleum exchange is a reliable source of information on volume, price, and quality of goods, helping state management agencies make accurate forecasts to plan and avoid disruptions in the supply chain.

The participating entities include 2 petrochemical refineries, 38 wholesale trading enterprises, more than 320 distributors and representatives of private petroleum enterprises in more than 17,000 petroleum retail stores. The State can assign a unit to establish a Petroleum Exchange, set out principles and policies to monitor operations and collect taxes and fees in accordance with the trading volume on the exchange.

Accordingly, sellers can list the time, location, type of goods, quality, quantity, price, etc. of the supplied goods. Buyers can consider making a contract to buy products from sellers at a suitable price. To ensure the legality, the regulations of the Exchange are strictly implemented, ensuring the rights of the participating parties, it is necessary to establish an independent monitoring agency; apply blockchain technology, artificial intelligence (AI) in monitoring to detect unusual transactions.

So what solutions are needed to effectively manage and operate the Physical Petroleum Exchange, sir?

The petroleum trading floor will help ensure the interests of both buyers and sellers.

First of all, Vietnam needs to quickly build a legal framework related to the Petroleum Exchange to have a sufficient legal basis for operation. The construction and management of the Physical Petroleum Exchange can be assigned to the Vietnam Commodity Exchange based on the regulations of the management agencies on the operating mechanism. It is necessary to soon have a mechanism to establish a Physical Petroleum Exchange so that this information can reach all entities participating in transactions and direct purchases on the Exchange.

In terms of prices, in the immediate future, the State agency must periodically announce the formula for calculating and the ceiling price of gasoline with the maximum wholesale price and the maximum retail price to ensure the market can operate stably. Sellers will compete fairly in determining the selling price, but it must be lower than the prescribed ceiling price. Buyers can proactively choose to buy from the entity with the lowest price and the most suitable conditions. In the long term, the market and businesses will gradually decide on prices.

The Ministry of Industry and Trade needs to allocate minimum production quotas, minimum import quotas for petroleum, and appropriate supply periods for manufacturing plants and qualified petroleum import points. These points must comply with the quotas and time limits, ensuring stable consumption in the system and the amount of petroleum reserved for business.

In the long term, businesses will determine and calculate the quantity of domestic and international petroleum products purchased to meet market demand. Vietnam needs to innovate its management methods and government intervention in the price fluctuations of the petroleum market. The government will gradually intervene in market prices by increasing or decreasing the supply of petroleum from releasing national reserves or increasing reserve purchases.

It is time to build a National Petroleum Reserve in each region to serve the need for energy security. The establishment, formation and use of the Petroleum Stabilization Fund will need to change by the Government focusing on managing and converting it into basic petroleum in the national reserve so that it can be ready to sell and intervene in the market when there are "shocks" in price or supply.

Thank you very much!

According to Tin Tuc Newspaper

Source: https://doanhnghiepvn.vn/kinh-te/go-nut-that-cho-thi-truong-xang-dau/20240830104555751