Deputy Minister of Industry and Trade Do Thang Hai

Questions about regulations of the petroleum market were asked of the Ministry of Industry and Trade (MOIT) at a government press conference on September 6. The concern was the ministry’s decision on September 5 on revoking petroleum import and export licenses of five distributors.

“What are the reasons behind the decision to revoke licenses and how will this affect the petroleum market?” reporters asked.

Hai said on February 15, MOIT released a decision on inspecting petroleum distribution companies' compliance with petrol regulations. On August 31, the ministry’s inspectors issued 18 decisions on imposing administrative punishments on 11 enterprises and their subsidiaries for violations in petroleum trading, with total fines of VND13 billion.

The inspectors also issued decisions on imposing additional punishments – taking away the right to use licenses for importing and exporting petroleum products for one month of five companies: Dong Thap Petroleum Trading Import Export JSC (Petimex), Tin Nghia Petroleum Import-Export JSC, Saigon Petro Co.,Ltd, Hung Hau Petroleum Co., Ltd and Orient Oil.

“The common problem of the enterprises is that they could not satisfy requirements for petroleum distribution systems. With this decision, the five enterprises cannot import and export petroleum products. They also cannot buy petroleum products in the domestic market and sell products to other companies,” Hai explained.

Stressing that the enterprises violating regulations must be strictly punished, Hai also noted the difficulties faced by enterprises after the pandemic period. The top priority for now is ensuring sufficient petroleum supply to serve production and consumption.

MOIT has decided that in the immediate time, the ministry will impose administrative fines on the enterprises, while the additional punishment – temporary revoking of business licenses – will be implemented at a reasonable time. This was reported to the government at the regular meeting.

“We are handling the situation and we hope we can find the best and most reasonable solution in the current conditions,” Hai said.

He mentioned that, for the first time in Vietnam, oil prices are higher than petroleum prices, blaming the world market.

Because of the Russia-Ukraine conflict, gas supply for the European and US markets has decreased, so demand for diesel and kerosene has increased to replace gas. 

As a result, the prices of oil products have been escalating, particularly in recent months as winter is nearing.

“The petrol price is about $105 per barrel, while oil prices are at $143 per barrel,” Hai said.

Retail prices of petrol are higher than oil products as the tax on petrol is higher. For example, the import tariff is 0-0.12 percent on oil and 9.7 percent on petrol. While the luxury tax on oil is zero percent, the figure is 8-10 percent on petrol.

However, at the latest administration review on September 5, oil prices for the first time were higher than petrol prices because oil prices in the world market were $30-50 per barrel higher.

Regarding the temporary revoking of licenses, on September 5, Saigon Petro sent an urgent document to the Prime Minister and MOIT, reporting the petrol trading situation. 

Under Decree 83/2014, businesses trading petrol products must have a distribution network comprising at least 10 retail stores owned or co-owned by the enterprises, and at least 40 sales agents belonging to the businesses' distribution networks.

Saigon Petro affirmed that it can satisfy all the requirements on the distribution network because it always has more than 40 businesspeople who have the right to retail petrol.

If Saigon Petro’s license is revoked, its distribution network would lose supply of 50,000 cubic meters a month and more than 1,000 retail filling stations may have to close the doors, thus affecting market supply.

Saigon Petro asked the Prime Minister and MOIT to reconsider the decision on revoking business licenses to ensure market supply stability.

A source told VietNamNet that Saigon Petro leaders on September 6 flew to Hanoi to seek solutions to the problem. The filling stations belonging to Saigon Petro were still operating as usual on that day. Workers at the stations said they had not heard about the suspension of operation.

Quang Phong - Thu Hang