Hanoi, August 06, 2024, The Europe Today: The Ministry of Industry and Trade’s draft proposal to amend the decree on petrol business, which restricts distributors from trading petrol with each other and mandates purchasing only from wholesalers, has faced significant opposition.
The ministry asserts that the proposal aims to control the origin, quality, and prices of petroleum products. However, petrol businesses argue that this move will stifle competition, empower wholesalers excessively, and complicate the supply chains for 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,” stated Bùi Ngọc Bảo, President of the Việt Nam Petroleum Association. He further noted that wholesalers might not always have adequate supply at reasonable prices in every locality at all times. He suggested that distributors should be permitted to trade petrol with each other up to specific proportions, such as buying 50-70% from wholesalers and the remainder from other distributors.
Bảo emphasized the need for careful consideration of the proposal, advocating for distributors to be allowed to procure petroleum products from various sources, including wholesalers and producers.
The Việt Nam Chamber of Commerce and Industry (VCCI) highlighted that participants in the petroleum wholesale market tend to prioritize sources with better prices, which should be determined by market competition. They argued that suppliers with higher prices would naturally be phased out of the market.
The Ministry of Justice also expressed concerns, stating that prohibiting distributors from trading with each other would limit their supply choices, potentially conflicting with the Government’s competition policies.
In response, a representative from the Domestic Market Department under the Ministry of Industry and Trade mentioned that various options would be proposed to the government for consideration. The ministry affirmed its commitment to considering contributions from associations, enterprises, and experts on establishing a petroleum exchange to develop an appropriate model for Việt Nam.
In mid-July, the Government tasked the Ministry of Industry and Trade with studying the foundation of a petroleum exchange to enhance market transparency. Despite this initiative, there are numerous concerns regarding the establishment of a petrol exchange, particularly its substantial investment requirements, management, supervision mechanisms, and operational efficiency.
The trading of crude oil and natural gas was piloted in Việt Nam from May 2020 to May 2024. However, the Mercantile Exchange of Việt Nam reported that the pilot implementation did not attract many participants due to policy instability.
As the debate continues, the future of the proposed amendments remains uncertain, with stakeholders calling for a balanced approach that ensures market competition and supply chain efficiency.
