Petroleum price fluctuations to see more control

“Petrolimex is by far the largest petroleum company in Vietnam, but it’s definitely not the only one in its field. There are actually 11 petroleum import and distribution companies out there in the market, and all are owned by the State,” Ms. Nguyen Cam Tu, Deputy Minister of Industry and Trade said.

The Ministry of Industry and Trade has recently held a conference with petroleum businesses which was aimed at re-evaluating petroleum trading mechanisms in accordance with Decree 84. (Decree 84?) According to Ms. Nguyen Cam Tu, these businesses have complied with regulations in their recent price adjustments. It is only a shame that due to a lack of experience in the adjustment of prices, these businesses increased their price to about VND 590 more per litre on the 8th day of the first Lunar month. This was considered to be a wrong and insensitive move.

Ms. Nguyen Thanh Huong, the Deputy Director of Administration (Ministry of Finance) said, “These businesses will slowly gain more experience in their ability to determine when it is a good time to make changes to their price. From the Ministry of Finance’s perspective, price increases shouldn’t fall on Tet holidays, especially gas prices. Even electricity price increases have to wait until March.”

Mr. Bui Ngoc Bao, General Manager of Petrolimex, however, explained that Petrolimex and other gas companies strictly followed the regulations in Decree 84 over the last two months. Any matter related to the adjustment of prices was thought through and carefully calculated.

“Businesses were able to stabilise the market by complying with the regulations in Decree 84. According to this decree, businesses were permitted to increase their prices 9 times (once every 10 days) from December 15, 2009 up to now. However, in reality, gas prices were only changed once on January 14, and prices on other goods were both increased and reduced at different times. Businesses should try to stabilise their prices and prevent inflation from occurring; the time between one adjustment to the next should be as long as possible. Price changes should be as low as possible during price adjustment periods. There will be a number of times businesses cannot adjust their prices and will have to sit and wait for the world market. It shouldn’t be an excuse to greatly increase the price all at once,” Mr. Bao said.

Ms. Nguyen Cam Tu added that the biggest problem at the moment is a lack of information. “We need to establish a periodical report either once a week or every 10 days in order to inform consumers about the average gas price of every month. The Ministry of Industry and Trade will start to issue periodical reports evaluating gas price adjustments so people can become more informed.”

Talking about exclusive rights in business, Ms. Nguyen Cam Tu also said, “Although Petrolimex is holding about 60% of the gas market share in Vietnam and is considered to be at the top market position, the reason for this is that Petrolimex is the most long-standing State company in the role of gas distribution since it was established in 1956, and not due to any link or mergence of enterprises in the same business field to increase market monopoly in the petroleum market.”

Tags: Vietnam oil, Vietnam oil and gas, vietnam oil gas, Vietnam Petroleum, Vietnam Petroleum price