Another proposal to loosen the price autonomy of petroleum enterprises?

This is an issue that is attracting mixed opinions from economists and the business community.

The latest draft Decree to replace Decree 84 on petroleum trading has just been submitted by the Ministry of Industry and Trade to the Prime Minister. According to the provisions of the Draft, if the base price increases by 3%, the main petroleum trading enterprises have the right to decide on price adjustment. This is an issue that is attracting conflicting opinions from economists and businesses.

Many experts believe that the regulations in the new draft are in a trend that benefits businesses (Photo: KT)

One of the notable points of this Draft Decree to replace Decree 84 of the Government is the range of gasoline price adjustment. According to the new Draft Decree, gasoline enterprises will be allowed to increase prices within a range of 3%, when the input factors constituting the base price (including world price plus tax, fees, stabilization fund...) increase by 3% compared to the current retail price (previous draft was 2%). If the base price increases from over 3% - 7%, enterprises must send a price declaration to the Ministry of Finance - Industry and Trade 2 days before the price increase.

If no response is received from the inter-ministerial committee, the enterprise is entitled to decide to increase the price by up to 3%. After 5 days, from the time the enterprise increases the price, if the state agency does not adjust the price, the enterprise is allowed to increase the remaining amount. In case the base price increases by more than 7%, or the price increase affects the socio-economic development and people's lives, the Prime Minister will decide on price stabilization measures.

According to some key petroleum trading enterprises, the adjustment range as in the new draft, at 3% is reasonable. The reason is that each time there is a fluctuation, the price only increases by about 3%, equivalent to an increase of 400 - 600 VND/liter, which will avoid speculation and hoarding, and people will also accept it more easily. However, disagreeing with this argument, some economic experts expressed concern that the regulations as in the new draft are following a trend that is beneficial to businesses. Because even if the price of petroleum increases by 7%, businesses only need to report to the management agency within 5 days for consideration.

If the inter-ministerial committee does not respond within this time limit, the enterprise is still allowed to increase its own prices. The question is, how to control the frequency of price increases of petroleum enterprises and which agency will be responsible for monitoring the price increases of the world market?

Dr. Le Dang Doanh, former Director of the Central Institute for Economic Management, commented: “The expansion of price decision-making power is controversial because it is beneficial to businesses but disadvantageous to consumers. It is necessary to clearly identify which agency is in charge of monitoring price increases in the world market to control businesses' requests for price adjustments. In addition, it is necessary to specifically identify the responsibilities of the Ministry of Finance and the Ministry of Industry and Trade in this matter. The competent authorities need to review and appraise how world price fluctuations are calculated to avoid abuse and disadvantage to consumers.”

In fact, the Vietnamese petroleum market has not yet formed a true competitive market because the Vietnam National Petroleum Group (Petrolimex) still accounts for more than 50% of the market share. Therefore, expanding the pricing rights for petroleum enterprises, even at the smallest margin, makes the public concerned about transparency, especially when the draft stipulates a minimum interval between two price increases of 15 days. The public is concerned that with these regulations, it is inevitable that enterprises can increase petroleum prices twice in just one month.

Economist Ngo Tri Long commented: “The regulation of 3 levels of amplitude like that is still an old way of thinking, nothing has changed and caused a lot of indignation in public opinion about the way of operating the gasoline mechanism. With such amplitude, businesses can still take advantage of that amplitude to try to circumvent the law to increase prices. Such an operation method is not suitable for the price determination mechanism for the current monopoly type of gasoline market. For the current monopoly market, it is impossible to let businesses set their own prices even though the amplitude is very narrow, businesses still take advantage of that amplitude to increase prices, causing damage to consumers. The gasoline market does not have real competition. Therefore, it is necessary to reconsider this issue.”

Since the beginning of the year, gasoline prices have been adjusted many times with increases of around 300 VND/liter. The most recent adjustment, with an increase of 330 VND/liter, has brought gasoline prices to a record high of 25,230 VND/liter to 25,730 VND/liter. To control and limit the situation of continuous price increases that are detrimental to consumers, some experts recommend that the authorities should calculate and consider setting a maximum price, also known as a ceiling price, for gasoline products. If the right to set prices is given to businesses in a market without real competition, even with the smallest margin, the beneficiaries will still not belong to consumers./.

According to vov