Petroleum is an essential goods and plays an important role in production, business and consumption of enterprises and individuals; therefore, petroleum trading activities of traders are always strictly managed by the State to ensure the best harmony of interests of all parties. In the face of recent unpredictable fluctuations in the world that affect petroleum prices and supply, on November 17, 2023, the Government issued Decree 80/2023/ND-CP ("Decree 80")amending and supplementing a number of articles of Decree 95/2021/ND-CP ("Decree 95") and Decree 83/2014/ND-CP ("Decree 83") on trading petroleum. According to ATA's assessment, Decree 80 not only adjusts in the direction of creating a flexible petroleum management and trading mechanism but also strengthens the responsibility of petroleum enterprises, specifically as follows:
1. A flexible petroleum gasoline price management mechanism
1.1. Shortening the petroleum price management time: it is implemented once a week on Thursday, instead of every 10 days on the first, eleven, and twenty-first days of the month as prescribed in Decree 95.
1.2. Shortening the management time of the base price factors:
a. The time for the Ministry of Finance to review and adjust the cost of transferring petroleum from abroad to Vietnam or from domestic refineries to ports is shortened to 3 months per time instead of 6 months per time;
b. In case during the implementation month, the actual reasonable and valid cost of transferring petroleum from abroad to Vietnamese ports or from domestic oil refineries to ports fluctuates with a margin of over 100%, the Ministry of Finance shall report to the Prime Minister to adjust the time for reviewing and announcing appropriate expenses.
2. A trader may act as a petroleum retail agent for up to 03 petroleum trading/distribution enterprises
Decree 95 previously only allowed a trader to act as a petroleum retail agent for one petroleum distributor or sole petroleum trading hub. However, Decree 80 extends the rights of agents to allow a trader to sign contracts as a petroleum retail agent for up to three (03) petroleum trading/distribution enterprises.
2. The Petroleum Price Stabilization Fund ("Price Stabilization Fund") must be frozen at banks and must be periodically reported on its use to regulatory authorities
Petroleum trading focal enterprises set up the Price Stabilization Fund. This Fund is a supporting tool to help the State regulate and stabilize domestic petroleum selling prices (not allowing petroleum prices to increase and negatively affect enterprises, or individuals). Previously, Decree 95 stipulated that enterprises set up and manage this fund by themselves, ensuring the preservation of the balance of the Price Stabilization Fund. However, this regulation is not really strict and there is no mechanism to monitor enforcement. Therefore, Decree 80 has supplemented the following provisions:
a. The Price Stabilization Fund’s account must be frozen by the bank and only used for the purpose of setting up and spending according to the petroleum management notice of the Ministry of Industry and Trade;
b. Petroleum trading focal enterprises shall prepare and submit to the Ministry of Finance and the Ministry of Industry and Trade:
(i). Report on the implementation of the Petroleum Price Stabilization Fund in the preceding month - made on a monthly basis; and
(ii). The independent audit report on the Petroleum Price Stabilization Fund - conducted every 6 months.
c. When issuing a new Certificate of eligibility as a petroleum trading focal trader expires, an enterprise must provide a document evidencing the full fulfillment of its obligations on appropriation, expenditure and transfer of the Price Stabilization Fund.
d. A petroleum trading focal trader who has been administratively sanctioned but repeat violations of the appropriation, establishment, expenditure, and transfer of the Price Stabilization Fund may be considered for suspension of petroleum trading for up to 60 days and at least 30 days or revocation of the Certificate.
4. Supplementing and concretizing cases of revocation of Business Licenses in the petroleum sector
Decree 80 supplements, amends and clearly stipulates that the following cases will be considered for revocation of business licenses in the petroleum sector Certificate of eligibility as traders of (+) petroleum trading hubs; (+) petroleum distribution; (+) petroleum retailers; (+) Certificate of eligibility for retail sale of petrol, specifically as follows:
a. Traders shall not continue to do business in the petroleum sector and shall send a written request to the competent State agency (Ministry of Industry and Trade/Department of Industry and Trade) requesting the revocation of the issued certificate.
b. Traders shall cease to carry out all petroleum trading activities for a period of 90 days or more or 30 days or more for traders who are petroleum retailers.
c. Traders shall be dissolved or bankrupt in accordance with law.
d. Traders failing to fulfill the minimum total petroleum resources assigned by the Ministry of Industry and Trade for two (02) consecutive years;
e. Traders violate regulations on conditions for petroleum traders and fail to remedy their violations within ninety (90) days from the date of issuance of decisions on sanctioning administrative violations.
f. Traders violate regulations on minimum compulsory petroleum reserves and fail to remedy violations within ninety (90) days from the date of issuance of decisions on sanctioning administrative violations.
g. Traders who are being handled for violations repeat violations of regulations on ensuring the quantity and quality of petroleum circulating on the market, violating regulations on increase and decrease of petroleum selling prices and regulations of law on quality.
h. Traders who reorganize enterprises (divide, consolidate, merge, change forms or do not continue to work as traders doing business in the petroleum sector) cause the enterprises not to meet the corresponding business conditions.
i. Traders repeat offenses repeatedly for violations in the establishment and use of the Price Stabilization Fund.
Decree 80 takes effect from November 17, 2023.
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