Amendments to petrol business regulations needs to be market-based

Oil tanker trucks at a filling station of PV Oil. Distributors want to be allowed to buy petroleum products from many sources, including wholesalers and producers.— VNA/VNS Photo Thanh Tân

HÀ NỘI — The Ministry of Industry and Trade’s draft proposal to amend the decree on petrol business so that distributors are not allowed to trade petrol with each other but only permitted by buy petrol from wholesalers, has met objections.  

While the ministry said that the proposal aimed to control the origin, quality and prices of petroleum products, petrol businesses said that this proposal, if put into effect, will limit competition and give too much power to wholesalers, causing difficulties to the supply chains of distributors and retailers.

In the market, petroleum distributors should be allowed to decide where they can buy and sell and this should not be limited, Bùi Ngọc Bảo, President of Việt Nam Petroleum Association said.

Moreover, wholesalers may not always have enough supply at reasonable prices in a locality at a point of time, he said. Distributors should be allowed to trade petrol with each other with specific proportions, he said.

Specifically, distributors can buy 50-70 per cent from wholesalers while the rest can be from other distributors.

The proposal needed to be put under careful consideration, Bảo said.

Distributors expected that they will be allowed to buy petroleum products from many sources, including wholesalers and producers.

According to Việt Nam Chamber of Commerce and Industry (VCCI), parties participating in the petroleum wholesale market all tend to prioritise purchasing from sources with better prices. Suppliers with higher prices will be eliminated from the market. This should be decided by market competition.

The Ministry of Justice also said that banning distributors from trading with each other will limit the choices for supply sources of distributors, which might not be appropriate to the Government’s policies of competition.  

In response, a representative from the Domestic Market Department under the Ministry of Industry and Trade said that different options will be raised and proposed to the government for consideration.

The ministry also said that it will continue to listen to contributions from associations, enterprises and experts on the establishment of a petroleum exchange to develop an appropriate model for Việt Nam.

In mid-July, the Government asked the Ministry of Industry and Trade to study the foundation of a petroleum exchange to improve transparency of the petroleum market.

There are many concerns over the establishment of a petrol exchange regarding its huge investment, management and supervision mechanism and efficiency in operation.

In Việt Nam, the trading of crude oil and natural gas was piloted from May 2020 to May 2024. However, according to the Mercantile Exchange of Việt Nam, the pilot implementation did not attract many participants due to lack of stabilities in policies. — VNS