MOF vows to clarify petroleum cost prices

The “battle of words” between the Ministry of Trade and Industry (MOIT) & the Ministry of Finance (MOF) on the petroleum pricing mechanism still continues, though the meeting gathering the representatives from the two ministries finished last week.

Deputy Minister of MOIT Nguyen Cam Tu, who supports petroleum distributors and importers, said at the last week’s meeting that petroleum enterprises have been incurring big losses, warning that if the enterprises are not allowed to raise the retail prices, they will “die”, which means that the petroleum supply will be interrupted.

However, the warning seems to be insignificant to Minister of Finance, Vuong Dinh Hue, who said that he well understands the petroleum cost prices and that he does not regret making the decision on slashing the petrol price by 500 dong per litre lately, the move that MOIT and petroleum enterprises call an “unreasonable decision”.

Hue said that before making the decision, he found out from the figures updated by the customs agencies that Petrolimex, the petroleum distributor that holds 60 percent of the market share, could make a profit of 780 dong for every liter of petrol sold. Hue also said that he then asked Petrolimex’s Chair if it was feasible to ease the petrol prices, and received the answer “yes”.

Right after the meeting, Petrolimex held a press conference, where its managers tried to explain that the information that participants heard at the meeting about the profit of 780 dong per liter was “not true”.

Petrolimex’s Chair, Bui Ngoc Bao denied the information released by Minister of Finance, Vuong Dinh Hue about the profit.

According to Bao, at that moment (August 26), before the MOF ordered to slash the petrol prices, Petrolimex only made a profit of 122 dong for every liter of A92 petrol sold, excluding the “rationed profit” of 300 dong per liter. Meanwhile, the profit for diesel sale was 441 dong per liter.

As such, after the petrol price was eased and after contributing money to the petrol price stabilization fund, Petrolimex has been incurring the loss of 135 dong per liter.

Bao emphasized that the corporation can make a profit of 441 dong per liter for the sale of the most profitable product, denying the information that it is making a profit of over 1000 dong per liter.

He confirmed that he met Minister of Finance, Vuong Dinh Hue before the minister ordered to ease the petroleum prices. However, he said that at the meeting he only reported the business performance and discussed about whether to slash petroleum prices, while he did not agree on the price decreases.

With the arguments about the petroleum pricing mechanism, Hue, Minister of Finance, who has just taken the office, has become a ”celebrity”. A lot of readers have expressed their support to Hue, saying that Hue spent a long time working at the State Audit and he well understands the “tricks” of accountants.

Hue continues to keep a firm attitude when replying to the threat by MOIT about the possible collapse of the petroleum product distribution network. He said that if Petrolimex and other petroleum distributors continue incurring losses, they should leave the market.

“Even if Petrolimex cannot do well, we will allow the corporation to get dissolved and set up other corporations. The State does not threaten anyone, and no one can threaten the State,” he said.

In an effort to “make the public see reason”, MOF has decided to set up three teams of inspectors to be in charge of checking the petroleum cost prices. The checking, according to MOF, is really very necessary because it can provide figures and proofs to help relevant ministries set up reasonable pricing mechanism.

The price checking will be carried out at Petrolimex, and some other petroleum importers and distributors.

A solution has been suggested which is believed to help settle the current problems. For a long time, the monopoly of Petrolimex has been attributed to the lack of transparency in petroleum pricing mechanism. Therefore, experts believe that it is necessary to separate Petrolimex into two parts, Petrolimex 1 and Petrolimex 2. If so, there will be three “big guys” on the market, including the two Petrolimex and PV Oil, each of which will hold 30 percent of the market share.

Source Vietnamnet

Tags: Vietnam petroleum cost prices