Tightened controls weed out many gas businesses

A new decree to tighten control over the gas trade will take effect tomorrow, January 15. Meanwhile, enterprises still complain that many of its terms are not reasonable.
The Decree 107 on gas market management stipulates requirements that businesses must meet in order to be eligible to trade gas.

However, according to Deputy Director of the Hanoi Department of Industry and Trade Nguyen Nhu Mai, the department has not received guidance documents for the decree’s implementation.

For instance, the decree requires training for officers of gas trading establishments, while has not designated which agencies have responsibility for the training.

The gas market is now under the management of many ministries and branches, including the Ministries of Science and Technology, and Public Security. Will every ministry train officers in their specific fields?

The decree also grants people’s committees the responsibility of programming gas depots with capacities of less than 5,000 cubic meters. To date, however, many have not been issued a plan on gas market development.

Hanoi, for example, after merging with Ha Tay, must now rebuild the master plan for socio-economic development. “As the master plan revisions have not been completed, one should not expect the gas trading development plan,” Mai observed.

Under the new decree, the Ministry of Industry and Trade has to program the network of gas depots with capacities over 5,000 tons. Their instructions have also not been issued.

Province departments of industry and trade have also warned that if decentralization in gas trading licensing is not implemented, not enough licenses will be granted by October 1, 2010.

A Gas Trading Association representative protested that many regulations of Decree 107 are too rigid and unreasonable.

Article 32 stipulates that gas sale agents must show logos of the wholesale gas providers. Every agent is allowed to trade gas from up to three providers at maximum. The same requirement is being applied to gas stations.

Unlike gas stations, gas shops are mainly located in small areas. “With such a small space, how can we find a place for three plates with logos?” a sales agent complained.

Analysts have pointed out that rules on depot capacity (the number of sale agents and gas tanks) may force the 20 current gas importers out of the market. In theory, they have nine months more to upgrade their facilities, but it is clear that many of them will give up.

According to the Ministry of Industry and Trade, the gas market has been developing very rapidly, with the annual growth rate of 7-10 percent. In 2009 alone, Vietnam consumed nearly one million tons of gas. Domestic sources can provide 30 percent of the total demand, while the remaining must be fed by imports.

Tags: Vietnam business news