In the third draft of the decree on gasoline and oil business, the Ministry of Industry and Trade continues to propose that the state announce the price-forming factors, allowing enterprises to self-determine prices, perform price registration, and send notifications to the competent state management agency for supervision.
When a competitive gasoline and oil market is established, the regulation on fixed profit margin should be removed
Specifically, the state announces the world gasoline and oil product prices, with a premium calculated on a 7-day average.
Gasoline and oil trading merchants base their selling prices on fixed factors such as various types of taxes, business expenses, and the prescribed fixed profit margin. The fixed profit margin remains at VND 300 per liter or kg of gasoline and oil.
However, Mr. Bui Ngoc Bao, Chairman of the Vietnam Gasoline and Oil Association, suggested that when a competitive gasoline and oil market is established, the regulation on a fixed profit margin should be removed.
“I find this regulation very off-putting. In business, you reap the profits or bear the losses; if you can’t compete, you exit the market,” he stated.
The Chairman of the Vietnam Gasoline and Oil Association gave a hypothetical scenario: suppose the regulation sets the circulation costs and business operation expenses at 15% of the state-prescribed price, with the remainder going towards profit and other expenses. If a business makes a loss and cannot compete, it should exit the market.
Mr. Bao expressed the enterprises’ desire for the state management agency to expedite the process of developing and perfecting the decree.
One of the crucial decisions that will determine the success of the decrees is to restore the principles of a market economy with state management. Firstly, the price formula must be comprehensive.
As it is known, since the issuance of Circular 104 determining the components in the gasoline and oil base price formula, business expenses have been set at a fixed rate of VND 1,050 per liter, and profit margin at VND 300 per liter.
However, in 2022, the supply of gasoline and oil faced localized shortages at certain times, while retail outlets complained of receiving zero discounts.
At that time, some retail businesses argued that each liter of gasoline sold incurred a total of VND 1,350 per liter in expenses for the stages from the trader to distribution and retail. Nevertheless, the specific expenses were entirely at the discretion of the trading enterprises, and they even took the entire amount.
