New proposal on petroleum business: Enterprises can have the freedom to set retail prices

DNHN - In a recent draft, the Ministry of Industry and Trade maintains the viewpoint that enterprises should calculate petroleum prices based on state-published factors.

In the third draft decree on petroleum business submitted to the Ministry of Justice for appraisal, the Ministry of Industry and Trade retains the same viewpoint as in the April draft: the state will not regulate domestic fuel retail prices. Instead, key and distribution petroleum enterprises will calculate and decide retail prices based on factors published by the state.

Accordingly, the regulatory body will announce the average global price every seven days and certain fixed costs, including exchange rates, special consumption tax, VAT, and import tax. Based on this data, key enterprises will add business costs and fixed profit margins to calculate the maximum retail price. The retail price to consumers must not exceed this maximum level. Retail prices in mountainous, remote, and island areas are allowed to increase by up to 2% compared to other areas.

Key petroleum businesses will notify and declare retail prices to the Ministry of Industry and Trade and the Ministry of Finance after announcing retail prices. Additionally, they must send notifications and price declarations to the Department of Industry and Trade, the Department of Finance, and the Market Management Department in the localities where they conduct petroleum business. In case of unusual fluctuations in petroleum prices that significantly impact the economy, society, production, business, or people's lives, or when the competent authority declares an emergency, the Ministry of Industry and Trade will coordinate with the Ministry of Finance and related ministries and agencies to report to the Government for implementing price stabilization measures according to the Price Law.

Unlike previous drafts, this time, the Ministry of Industry and Trade does not propose specific levels for business costs and fixed profit margins that enterprises can add to retail prices (previously 1,800 - 2,000 VND per liter or 4 - 20%). Instead, the authorities will announce the initial base level of circulation costs and review it every three years. Enterprises will calculate and adjust these costs annually according to the consumer price index (CPI). The fixed profit margin remains at 300 VND per liter or kilogram of petroleum.

Other costs such as transportation, insurance, loss, handling, etc., will be updated every three months by the regulatory body, except in case of unusual fluctuations. Key petroleum businesses must submit independent audit reports of these costs for the previous three months to the Ministry of Industry and Trade.

The Ministry of Industry and Trade argues that with the current petroleum price management mechanism, both state regulatory agencies and enterprises have to undertake too many steps, making petroleum trading businesses not proactive in deciding retail prices and having to wait for base prices announced by state regulatory agencies.

"This is a reform that helps petroleum trading businesses and regulatory agencies avoid periodic calculations and announcements of fixed business costs as currently. Enterprises must announce prices according to regulations, and state regulatory agencies will supervise the price announcements of enterprises," the Ministry of Industry and Trade emphasized.

Additionally, a new point in the third draft is that it does not specifically regulate the Petroleum Price Stabilization Fund but rather aims to regulate petroleum price stabilization similar to other items under the Price Stabilization Goods and Services List.

Petroleum price stabilization will be implemented according to the 2023 Price Law: In case of unusual fluctuations in petroleum prices that significantly affect the economy, society, production, business, and people's lives, the Ministry of Industry and Trade will coordinate with related ministries and agencies to assess the level of fluctuation and impact, then send a document to the Ministry of Finance to summarize and submit to the Government for considering and deciding on the price stabilization policy.

Anh Nguyen