Hanoi (VNS/VNA) -Authorities want to maintain the petrol price stabilisation fund as a tool tokeep retail prices stable and give them the ability to intervene in the marketwhen necessary.

But many businesses andspecialists don’t agree and are calling for the fund to be abolished.

Tran Duy Dong, Director of theDomestic Market Department under the Ministry of Industry and Trade said theDecree No 83 on petrol trading needs to be revised as it contained shortcomingsin relation to local petrol price management.

Dong said at the time ofbuilding the decree in 2014, the domestic petrol supply was much dependent onimported resources. The import amount was up to 75 to 80 percent of the total petrolsupplies while refineries Nghi Son and Binh Son had not come into operation.

The local petrol supplies now,however, account for 70 to 75 percent of the total. It was the reason that thepetrol management and calculation for basis price should be changed to reflectthe portions of locally made and imported petrol.

In the past five years, Vietnamsigned many free trade agreements (FTAs), resulting in the different importtaxes for petrol products from different countries such as China, ASEAN 20 percentand the Republic of Korea 10 percent.

He added that the decree wouldbe revised in eight contents relating to conditions for petrol trading anddistribution system as well as reviewing the current management mechanisms. Itwould also revise the basis price calculation and petrol price stabilisationfund.

The modification would stillmaintain the Government’s direction to follow the market economy mechanismunder the State management with regulatory tools. In the draft, the Government,ministries and relevant agencies agreed to keep the petrol price stabilisationfund, he added.

The supervisory delegation ofthe National Assembly Standing Committee in 2019 proposed to abolish itimmediately or have a clear roadmap to remove many funds, including the petrolprice stabilisation fund. The fund was established in 2009, with annualdeductions of up to several trillion VND but people do not know how that moneyis used. The Vietnam Petroleum Association (VINPA) has repeatedly askedministries and the Government to consider the use and maintenance of the fund.

VINPA in April 2019 said theuse of 300 VND per litre for the fund as stipulated in Decree 83 is causingconsumers and businesses to suffer from a negative fund of hundreds of billiondong. It added that the fund is taking money from petrol buyers to “stabilise”prices. So, petrol and oil buyers have been able to buy petrol at a stableprice, but because of the money they have paid in advance, not by third-partyintervention.

Economist Ngo Tri Long told Tien Phong (Vanguard) Newspaper thatGovernment should review regulations relating to the petrol reserves requiredfor at least 30 days of supply to create a healthy competition market forpetrol traders.

Long said the requirement waspromulgated in 2007 to ensure national energy security as Vietnam importedalmost all of its petrol at that time.

However, the local petrolsupplies have met with 75 percent of the total demand from two refineries of BinhSon and Nghi Son. The regulation therefore has not been suitable, even causinglosses for society.

He calculated the total socialdemand for petrol products was nearly 19 million cu.m per year. The requirementof at least 30 days of supply would create inventories, increase spending andreduce effectiveness for businesses.

It is time for us to reduce thereserves to 15 or 20 days to closely follow the petrol price adjustment ofevery fortnight, he added.

He proposed to supplement aregulation of compulsory reserves of five to seven days for petrol distributorsto ensure fairness./.