The Ministry of Industry and Trade has finished developing the draft amendments for the decree on oil and petrol trading, which includes three possible changes insiders say lack feasibility and still ignore the rights of the customers.

Fuel experts and representatives of the consumers were not invited to the conference held to collect feedback on the amendments by the Vietnam Petrol Association on Friday. The event was mostly attended by representatives of the fuel wholesalers and the relevant management agencies.

Three scenarios

The amendments are made towards the government’s decree no.84, which supervises and manages the fuel trading market.

In the first solution proposed in the bill, the industry and trade ministry suggests that when the input expenses contributing to the fuel cost prices of wholesalers increase under 5 percent, the wholesalers are allowed to hike retail prices within at least 15 days.

Meanwhile, if the cost prices drop under 6 percent, the wholesalers must cut retail prices within 15 days.

If the decrease is above 6 percent, management agencies hold the right to adjust the tax and the deduction for the fuel price stabilization fund, while traders have to continue to cut retail prices.

In the second scenario, the ministry suggests using the cost price of the previous month as the retail price for the following month. The cost price will be calculated based on the 30-day average price released by the Mean of Platts Singapore, or MOPS.

MOPS refers to the mean price of oil traded through Singapore as per the data from Platts, a commodity information and trading company.

The last solution suggests that at the very first working day of a new year, the industry ministry will set a ceiling for the fuel retail price that will be applicable for the whole year. Wholesalers will have the full right to adjust prices within the cap. If the cost prices are higher than the ceiling, wholesalers will be allowed to use money from the price stabilization fund to recoup losses.

Objections

Commenting on the proposed solutions, Nguyen Ngoc Son, from the Ho Chi Minh City University of Economics and Law, said none of them will be able to solve the root of the problem.

“The first solution wants to extend the time between two fuel price adjustments while the current 10-day period has long been a nuisance to consumers as it prevents domestic retail prices to go along with the global prices,” he said.

“So extending the period to 15 days would only exacerbate the issue.”

Son said there is no use discussing the second scenario, as it is completely infeasible.

“Instead of predicting the future price fluctuation, which is essential in running a business and economy management, now they want to manage prices based on data in the past,” he said.

Finally, the last solution too fails to ensure that consumers will be protected even though there is a ceiling price to prevent from sending retail prices to skyrocket, he commented.

“Wholesalers will be allowed to use the price stabilization fund to recoup for losses in case cost prices exceed the ceiling, but who can be sure that they will cut prices to help consumers when global prices go down?” he said.