On February 28, the Economic Committee of the National Assembly held a session to explain the situation on the oil market and the results of the implementation of tasks and solutions in the State Petroleum Administration.

Accordingly, the two main administrative ministries, including the Ministry of Industry and Trade and the Ministry of Finance, will explain issues related to the state management of petroleum and the situation of the petroleum market over time.

There are still many shortcomings

Speaking at the explanatory session, Minister of Industry and Commerce Nguyen Hong Dien said that Resolution No. 499 of the Standing Committee of the National Assembly, issued on March 28, 2022, mandated the Ministry of Industry and Commerce to focus on implementation of 7 groups to focus tasks and solutions key actions in the state administration of petroleum.

After nearly a year of implementing Resolution 499, Mr. Dien said 2022 will be a particularly difficult year for the global oil market due to the ongoing conflict between Russia and Ukraine, which is causing disruption and resource shortages. The dollar exchange rate and lending rates continued to rise, and it was difficult to access sources of foreign currency credit because oil companies could not meet the conditions for loans and guarantees from banks … has affected the progress and overall import of gasoline and oil by key companies.

On the other hand, domestic petroleum production is also directly affected by the Nghi Son Refinery supply disruption (early in the year and late 2022), causing difficulties in Vietnam’s domestic supply at certain times.

Regarding the national oil reserves, Mr. Dien said the Ministry of Industry and Trade has actively developed a plan to increase the national oil reserves and submitted it to the Prime Minister for approval four times. It proposes to increase the national petroleum reserve from the current 9 days of net imports to 15 days in 2023-2025 and further increase it to 30 days of net imports in 2026-2030.

Current difficulties, according to heads of the Ministry of Industry and Trade, the implementation of the separation between national oil reserves and circulating reserves of key companies is facing many difficulties.

The reason is that the state does not currently have national petroleum reserves and therefore needs to be hired by companies, while the norm for storing national petroleum reserves is currently very low and not suitable for reality. The ministry also organized a bidding process to select a company to conserve the national petroleum reserve separately, but there were no participating entities.

At the explanatory session, the deputies of the National Assembly openly pointed out the obstacles and shortcomings of the current regulations. For example, according to the National Reserve Law, the national petroleum reserve was not stored separately, but is still stored together in commercial warehouses owned by companies, resulting in a lack of transparency.

The pricing method has not yet ensured competitiveness, has not yet complied with the laws of the market, has not been “correctly and completely calculated” for companies, some price components are checked every 6 months and annually, do not correspond to the actual situation.

Determining the world price in the formula for calculating the base price by taking the “average price” of the 10 days before the operating time as the “max price” for the next 10 days does not guarantee the “max price”. “phase difference” between Vietnamese prices and world prices …

Mr. Dau Anh Tuan, deputy secretary-general of the Vietnam Trade and Industry Association, stressed that there are still many shortcomings in the current petroleum management policy. Normally retail companies can only source from one distributor, if they want to switch suppliers, ordering is also very complicated… this creates an unfair competitive market.

For example, if a retailer has a retail system, they naturally have the commodity source advantage. Therefore, there will be unfair competition with retail companies, the competition will not be transparent and unfair.

As for the wholesalers and intermediaries, it is also difficult to record even capital losses last year due to the exchange rate change, which does not fully reflect the costs in prices such as reserves.

Or the Petroleum Stabilization Fund still has a lot of uncertainties. Since the stabilization applies to only a few petroleum products, if we compare this group with the unstable group, we see that the group using the stabilization fund is more complicated than the unstable group. The stabilization principle is to unload the fund in the hope that the price will fall but the market is difficult to predict. If the fund is liquidated but the price rises, it will inadvertently push the price range higher and lose the ability to reflect market signals.

NEED A ROAD FOR CHANGE

In view of the fact that the government administration of petroleum overlaps tasks of many ministries, some suggestions are made to consider entrusting the administration to the Ministry of Industry and Trade in order to ensure proactive and flexible administration.

On the other hand, increased inspection and testing and strict sanctions to remove counterfeit and substandard gasoline from the market, prevent fraud, speculation and “cheating” in the gasoline business.

Some experts said that there is a need to study and develop a policy of special consumption tax and VAT on petroleum products in a more reasonable manner in order to ease the pressure on businesses and people, curb inflation and reduce input costs for production and businesses . ..

Vice Chairman of the National Assembly Nguyen Duc Hai stressed that oil is a strategic asset related to energy security and national security, so there is a need to reassess the oil market situation soon and clearly identify obstacles, both objective and subjective Identifying causes Proposing fundamental and comprehensive solutions to overcome.

At the same time, he requested the Economic Committee of the National Assembly to send a report to the Standing Committee of the National Assembly, the government, the relevant ministries, branches and agencies, including specific proposals and recommendations to the ministries and branches concerned, as well as local authorities fulfill their statutory requirements Tasks.

Ministries and sectors, according to their functions and tasks, submit a plan to the government and the Prime Minister to implement proposals and recommendations on explanatory content in the coming period.

Mr. Dau Anh Tuan said it is time to change the gasoline management mechanism to make it more market-oriented. At present, the market share of state-owned enterprises is limited, while the open economy imposes many regulations to regulate and control, which is very difficult.

“The requirement for sufficient calculation is very difficult because every company, every business model and every context is different. So I think there needs to be a road map for the market, this is expected in the amendment to the Decree on Petroleum Trade, the lifting of the trading conditions, the lifting of the current limit on the scope of opening petrol stations to avoid monopolies that the companies empower price setting, proactively choose purchasing sources…” said Mr. Tuan.

The representative of VCCI also openly said that Vietnam’s petroleum retail system is lagging behind compared to other countries. Therefore, gas stations in Vietnam are expected to develop into investment-capitalized convenience stores with long-term development prospects. At present, many companies have to endure the sale of gas stations, which is a bad signal and has a lasting impact on the quality of the national energy infrastructure.

On the one hand, more markets also need to improve market discipline. It is necessary to have an electronic invoice in the gasoline and oil trade to control the output and input, so the situation of smuggled gasoline of unknown origin and floating gasoline becomes much more limited.

At the same time, it is necessary to apply competition law to prevent companies from raising prices; need a strategic stock…