New petroleum price mechanism and management to come into effect

According to a new Government decision, the businesses that trade in domestic oil and gas are now allowed to set petroleum prices based on free market mechanisms. The event has captured the attention of oil and gas trading enterprises, economic managers, and enterprises using petroleum and their customers.

Previously, enterprises set prices according to the Government direction, adding an additional amplitude of 10 percent for petroleum and 5 percent for diesels. In fact, increases and decreases in petroleum prices were decided by the Inter-ministry of Finance and Trade. It meant that enterprises did not have the right to fix the petroleum prices themselves. The Government indirectly managed petroleum prices by specific regulations on trading conditions, by regulating demand and supply, and the national reserve and by controlling price-related factors. With new regulations, oil and gas trading enterprises will exercise their right to self control.

However, the most important thing that businesses and customers are interested in is how petroleum enterprises will fix the prices in the domestic market and whether they follow price guidelines as set by the market. If market prices increase, enterprises will have to drive up the prices of oil but if prices in the world market reduces will they also make any adjustment?

This concern is grounded on the fact that the country has now only 10 large “clue” enterprises, which are allowed to import petroleum. However, many petroleum enterprises said that this issue will be a non-starter since there is a tough competition among petroleum enterprises in prices and service quality. Furthermore, despite enterprises being entitled to fix selling prices, the State will still take strict measures to prevent them from monopolying prices and speculating to drive prices up.

The Government Decree on controlling petroleum prices will take effect 15 days after the announcement. Petroleum enterprises are waiting for the enforcement of the decree so that they can make their own choice about selling prices. Consumers should not worry but they should ready themselves for fluctuations in oil prices, which vary from day to day. Furthermore, prices will not be fixed at a single rate throughout the country as they will depend on the business conditions of each locality and each enterprise.

(Source: VOV)