In the Draft Decree on petroleum trading, the Ministry of Industry and Trade proposed prohibiting traders from distributing and trading petroleum with each other.

The Ministry of Industry and Trade is concerned that if traders are allowed to distribute and trade gasoline among themselves, it will lead to round-trip trading, through many intermediary levels, pushing up gasoline prices. In addition, there are also concerns that allowing traders to distribute each other’s gasoline will not control the gasoline supply…

Regarding this issue, speaking with PV. VietNamNet, Mr. Nguyen Minh Duc, Vietnam Federation of Commerce and Industry (VCCI) - said that the concern about the uncontrolled buying and selling of gasoline supply will not happen.

In reality, the distributors only sign contracts, but the gasoline is not actually transported between the traders but remains in the warehouse of the main enterprise. When it needs to be transported to the gas station, a truck is used to transport it. Meanwhile, the warehouses of the main enterprise must be connected to the network of the Ministry of Industry and Trade, so the entire amount of gasoline is fully reported online. Therefore, there is no need to worry about not being able to control the gasoline supply.

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Allowing distributors to freely buy and sell to each other will make gasoline prices more competitive. Photo: Minh Hien

Previously, the decree on petroleum business stipulated that distributors must ensure a minimum trading volume. The draft Decree on petroleum business has now removed this condition, only key traders must meet the minimum trading volume. The minimum trading volume assurance of key enterprises has been monitored at the warehouse, and the minimum total source has been allocated. Thus, the amount of petroleum for the market can be guaranteed.

Regarding concerns about rising prices and falling discounts, expert Nguyen Minh Duc admitted that this situation has existed before. The reason is that retail gasoline businesses are only allowed to buy from one distributor, so no matter how much the discount decreases, the buyer has to accept it. They have no way to switch to buying from another unit, and even if they see another place selling cheaper, they are not allowed to buy.

“Now the draft Decree allows petroleum retailers to import goods from many sources, so there will no longer be a situation where distributors can arbitrarily reduce discounts with the reason of increasing costs. If any distributor buys and sells in a roundabout way, leading to increased costs, it will not be able to survive because no one will buy the goods anymore,” Mr. Duc emphasized.

Reviewing the content of the draft decree, the Ministry of Justice also pointed out the inadequacies of the draft decree when it stipulates that petroleum distributors are not allowed to buy and sell petroleum to each other.

"The above limitation will, in principle, limit the choice of gasoline supply sources for gasoline distributors, which may not be consistent with the State's policy on competition in Clause 2, Article 6 of the 2018 Competition Law," the Ministry of Justice commented.

Clause 2, Article 6 of the 2018 Competition Law stipulates: "Promote competition, ensure the right to freedom of competition in business of enterprises according to the provisions of law".

The Ministry of Justice is concerned that the proposal in the petroleum decree for the above-mentioned distributors could be identified as an act of obstructing competition in the market which is strictly prohibited as stated in Point a, Clause 1, Article 8 of the Competition Law, which is "forcing, requesting, recommending enterprises... to carry out or not to carry out the production, purchase, sale of goods, supply, use of specific services or to buy, sell goods, supply, use services with specific enterprises".

At the recent seminar "For the petroleum market to develop stably, transparently and effectively", Mr. Bui Ngoc Bao - Chairman of the Vietnam Petroleum Association - also emphasized that since it is a market, where distributors buy and sell is up to them, and should not be restricted. Moreover, key enterprises do not always have enough quantity of goods and reasonable prices in each region and each time.

Mr. Bao suggested that there should be regulations allowing traders to distribute and buy and sell with each other, with specific rates. For example, 50-70% can be freely purchased from the main enterprise, the remaining 30% can be bought and sold with each other. Because, this is the business of regulating the market.

“If the market fluctuates abnormally, the amount of goods will be adjusted from traders distributing more goods to traders distributing less. Therefore, the proposal that distributors cannot buy goods from each other is something that needs to be carefully considered and evaluated,” Mr. Bao suggested.

The representative of the Drafting Committee of the Decree on Petroleum Business said that it has received comments and reported to the Government on the options. In the upcoming draft, the Drafting Committee will submit an additional option to allow petroleum distributors to buy and sell from each other so that the Government can consider and decide on an option that is suitable to reality, ensuring objectivity and science.

Concerns about the proposal to ban petrol distributors from buying and selling with each other Regarding the proposal to ban petrol distributors from buying and selling with each other, VCCI emphasized that this is baseless and goes against market rules.