According to the decree, traders can increase the retail price by 7 per cent if wholesale prices surge by 7 per cent.—Photo vef.

Ha Noi (Biz Hub)— Deputy Prime Minister Hoang Trung Hai has asked the Ministry of Industry and Trade and relevant ministries to submit to the Government in September a final draft of amended Decree No 84/2009/ND-CP on trading petrol.

In 2009, the Government issued Decree No 84 to allow traders to peg the petrol retail price on the domestic market to market prices.

According to the decree, traders can increase the retail price by 7 per cent if wholesale prices surge by 7 per cent. In case wholesale prices increase by 7-12 per cent, traders can increase retail prices by 7 per cent plus 60 per cent of the surplus of 7-12 per cent while the remaining 40 per cent would be compensated by the petrol price stabilisation fund.

If wholesale prices increase more than 12 per cent, the State will develop solutions to retain retail price stability through the stabilisation fund and import tax reductions.

According to some economists, Decree 84 aimed at trading petrol and oil under the market mechanism. However, there were many problems that should be amended.

Under the amendments made by the industry and trade ministry, traders can increase the retail price by 5 per cent if wholesale prices surge by 5 per cent. In case wholesale prices increase by 5-8 per cent, traders can increase retail prices by 5 per cent plus 60 per cent of the surplus of 5-8 per cent while the remaining 40 per cent would be compensated by the petrol price stabilisation fund.

The ministry also suggests using the cost price of the previous month as the retail price for the following month. The cost price will be calculated based on the 30-day average price released by the Mean of Platts Singapore, or MOPS.

MOPS refers to the mean price of oil traded through Singapore as per the data from Platts, a commodity information and trading company.

The last suggestion is that at the very first working day of a new year, the ministry will set a ceiling for the fuel retail price that will be applicable for the whole year. Wholesalers will have the full right to adjust prices within the cap. If the cost prices are higher than the ceiling, wholesalers will be allowed to use money from the price stabilisation fund to recoup losses.

The ministry allowed businesses to set prices for gasoline in 2009 on fluctuation between 7-12 per cent and have increased petrol prices 10 times per year. This time, the ministry suggested the fluctuation to stand at 5-8 per cent.

The low fluctuation would make a lower increase/decrease of the retail price but the change had not brought real interest to customers, said economist Ngo Tri Long.

The traders could still decide by themselves to change the retail price when the whole price increases or decreases by 5 per cent so they could easily increase the retail price and rarely decline the price. The customers much accept the prices fixed by the traders, he said.

The latest increase of petrol and oil prices were at between VND300-370 per litre on June 28 to VND24,110 for RON 92 petrol, VND21,840 for diesel oil, VND921,600 for kerosene and VND19,070 for fuel oil. — VNS