Gasoline distributors demand changes to price mechanism

At a seminar held to gather opinions on a proposed government decree on trading of gasoline and oil products on Feb.14, fuel firms spoke about the difficulties they face.

Ha Thanh Tung, a manager at Ha Giang Transport Trading Company, said retailers have been racking up losses of VND900 billion (US$38.1 million) a month, and they could total VND3-4 trillion in the period since March 2022.

Huynh Thu Company, which has two gas stations in the southern province of Tay Ninh, reported losses of nearly VND1 billion last year. Its representative Huynh Thu, said if retailers continue not to be paid commissions like they have since March 2022, they would go bankrupt.

Fuel firms said the price management mechanism is not appropriate. The manager of a retailer in the northern province of Ha Giang said wholesalers are privileged since they could stop supplying retailers, but the latter are sanctioned if they stop selling.

Nevertheless, wholesalers like Saigon Petro also suffered losses, especially in the second half of last year, its general director, Pham Van Thoai, said.

Of the 33 wholesalers in the country, only around half have had the funds needed to import gasoline products in recent months. Importers face high risks from major price and exchange rate fluctuations, he said.

Nguyen Hong Nam, head of sales at Petrolimex, a wholesaler with a nearly 50% market share, said wholesalers could not pay commissions to retailers when they themselves suffer losses.

But retailers demanded that a minimum commission should be fixed. Giang Chan Tay, director of Boi Ngoc Company in the southern province of Tra Vinh, said it is imperative to set a minimum commission rate of 5-6% to ensure retailers remain in business.

“If the government decree on trading gasoline products is not amended, the market will become unstable within just a few months as happened in 2022 and early 2023.”

Nguyen Dinh Cung, former director of the Central Institute for Economic Management, said authorities should scrap regulations that restrict the freedom to do business and only retain regulations on quality and safety.

“Don’t issue regulations like gas stations must be at least five meters apart. Let the market decide.”
Tran Duy Dong, director of the Ministry of Industry and Trade’s domestic markets department, said the decree would be amended to harmonize all stakeholders’ interests.

There are 17,000 gas stations in the country, two-thirds of them privately owned.