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Ministry affirms petrol price deregulation

Update: August, 18/2012 - 09:22

HA NOI — The State allowing domestic petrol traders to decide their own prices is consistent with the Law on Pricing, Law on Competition and the restructuring plan recently enacted by the Government, according to Vo Van Quyen, director of the Ministry of Industry and Trade's Market Department.

The steady increase in fuel retail prices in the last two months has raised much concern about the management mechanisms of authorised bodies and businesses, Quyen told Vietnam News Agency. After local petrol traders were allowed to determine their own prices within the trading band and price adjustment frequency in accordance with the Government's Decree 84 on fuel trading, prices began to consistently rise and fall.

Petrol wholesalers now have the right to fix wholesale prices as well as increase or cut prices in line with the decree.

Decree 84 provides that retail prices can be increased by fuel trading firms when input cost prices change.

On June 20, 2012 the National Assembly voted to adopt the Law on Price in response to the public demand for an effective legal framework to control price manipulation from dominant enterprises in the gasoline and electricity sectors. Under the Law on Price, petrol trading was subject to commodity groups with a view to stabilising prices in local market.

Quyen said the State still controlled prices to make sure that the fluctuations did not affect consumers , and attributed the consecutive decrease and increase in petrol retail price to the fluctuations of the world up-and-down oil prices.

The Competition Law also stipulated that the State was a major shareholder with more than 50 per cent of the stake in the petroleum trading industry.

It was clear that the State did not hand over authority to petrol traders to decide their own prices. The State was now in the process of gradually generating a competitive market by allowing businesses to decide their prices but it had to be finally decided by the State to avoid uncontrolled price adjustment. By doing so, the current petrol price adjustment did not go against the regulations in accordance to the Law on Competition and Law on Price, said Quyen. — VNS

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