VietNamNet Bridge – The Ministry of Finance’s (MOF) decision on setting the commission ceiling level at VND430 per liter has faced the strong opposition from agents. Analysts believe the “commission war” would last a long time.

Big losses anticipated

Petrol distributors, one after another, have continuously sent letters to MOF over the last four months, complaining about the commission policy.

Huyen Trang trade private enterprise in Hanoi is a retail agent of Hai Phong-based Petec Company which sells 140 million liters of petrol and other products a month.

According to the business’s owner, in order to run a filling station, the business has to pay VND150 per liter for the transportation cost, VND220 per liter for workers’ wage, VND40 per liter for electricity, water, phone and machine maintenance, VND50 per liter for VAT and other taxes, VND130 per liter for retail premises rents, and VND60 per liter for other expenses, totaling VND650 per liter.

However, under the MOF’s decision, the ceiling commission rate for agents is VND430 per liter, which means the loss of VND220 per liter for agents.

Duy Tuan, an agent of Bac Thai Petroleum Company, said with the current ceiling commission rate, the business is incurring the loss of VND170 per liter. The business has proposed to lift the ceiling rate to VND600 per liter, which is believed to be the minimum rate for enterprises to exist.

For biggest distribution enterprises, the profit they make with the current commission rate is trifle. According to the Petroleum Company Zone 1, an agent of the company has to pay VND41.6 million to retail Some VND100,000 liters a month. With the current commission rate of VND430 per liter, it gets the total turnover of VND43 million, which means the profit of VND1.4 million a month.

No one would spend billions of dong to run a filling station which can bring the trifle sum of money.

The Military Petroleum JSC estimates that a filling station needs VND50 million a month to run, and if it sells 100,000 cubic meters a month, the average level, it would incur the loss of VND4 million a month.

Businesses would commit frauds?

Under the MOF’s instruction No. 308, the filling stations located less than 50 kilometers far from the petroleum storehouses, can get the commission rate of VND430 per liter at maximum, while the filling stations more than 50 kilometers far can get higher commission rates, negotiable between the companies and the agents.

However, big petroleum enterprises do not think this is a good idea. In a dispatch to MOF, Saigon Petro, the biggest enterprise in the south, said businesses would “dodge the laws” to enjoy higher commission rates, which would make the petroleum market chaotic.

The company recalled the 2004-2008 period, when the selling prices were defined based on the distance. At that time, the State also set the ceiling commission rate for retail agents. A lot of problem arose in the period, while the market was in chaos.

It has warned that if MOF attempts to set a cap on the commission for agents, unhealthy competition would occur again, which would cause immeasurable consequences.

Pham Huyen