Gas businesses want compensation

Thursday, Oct 20, 2016 08:44

A gas shop in HCM City's District 3. — VNA/VNS Photo Thanh Vu
HA NOI (Biz Hub) — Some 800 small and medium sized gas trading companies have submitted a proposal to the Prime Minister Nguyen Xuan Phuc and Minister of Industry and Trade Tran Tuan Anh on gas trading requirements.

They have asked to maintain the current regulations on requirements for gas trading under Decree No 19/2016/ND-CP.

The businesses proposed that if the Government reduced the requirements, they would claim compensation for the several billions of dong they had invested in gas infrastructure.

Recently, several gas traders complained about shortcomings in the decree, leading to difficulties. They said the decree's regulations stipulating that gas companies had storage tanks and total LPG bottle capacities of at least 2.62 million litres were hard to fulfill, especially for those in remote and mountainous areas with low population density. Therefore, they asked for a review and amendment of the rules to facilitate trading as each gas company would have to invest VND25-30 billion (US$1.1-1.3 million) in the gas tank system when applying for a business licence.

Le Xuan Tuyen, director of Viet Xo Gas Joint Stock Company in northern Thai Binh Province, said the company had to borrow a huge loan from banks to invest in the infrastructure to meet the requirement.

The decree was promulgated on March 22, replacing Decree No 107/2009/ND-CP on November 26, 2009, on gas trading to facilitate gas companies.

Tuyen said the lower storage tanks and total LPG bottle capacities were one-third of what was stated in the previous decree. It meant that the decree allowed gas traders with low capacities to participate in the market, affecting other gas companies.

Sharing his ideas, Nguyen Minh Chau, director of Thanh Hoa Petroleum Company, said smuggled gas trading was popular in the market. In case of a fire or explosion, it was hard to hold traders responsible for the violations.

‘If the Government continues to lower the business regulations, the ministry should consider compensating us for our loans from the bank for investment into gas infrastructure," Chau added.

Le Khac Lam, director of Hoang Lam Transport and Trading Company, said the decree clearly stipulated the business models of gas importers, exporters, producers and processors, as well as distributors, agents and gas shops. It meant that companies could choose a business model suitable with their capacity.

Lam said some agents could take advantage of the reviewed rules (if approved) to become distributors despite the lack of storage tanks and total LPG bottle capacities.

"It will be good if there are more traders participating in the market. However, those who do not meet requirements of infrastructure could cause unhealthy competition and be unsafe for customers," he added.

He proposed that the Government and the ministry maintain the conditions.

In a conference held in Ha Noi last month, deputy minister Tran Quoc Khanh affirmed that the ministry had asked relevant departments to collect gas firms' ideas to submit to the government for review with an aim to provide the most favourable business environment to the firms. — VNS

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