Violations in petrol price management revealed
Violations in petrol price management revealed
On July 25, the State Audit Office announced at a press conference the auditing results of 2012 which found many petrol price management violations.
Since December 15, 2012, each consumer contributed VND300 per litre of petrol they buy in order to establish the price stabilisation fund. The fund will be disbursed to the petroleum enterprises in order to offset the losses they sustain when the world price of petrol increases but domestic retail prices must be kept low. The retail price is based on average world prices during a 30 day period.
Petrol companies must calculate the prices base on the interbank average foreign exchange rate. However, the Vietnam National Petroleum Group (Petrolimex) has used the rate set by Vietcombank, which is different from the interbank exchange rate.
"Consumers are, as usual, on the receiving end of this subterfuge. The whole price can be massively changed by just one different digit," economist Ngo Tri Long said.
Petrolimex's action is deemed illegal and is a ruse to raise the retail prices, say several experts. In addition, Petrolimex is being equitised and their appraisal of the state's stake was found to be wrong. The State Audit Office urged the Prime Minister to direct the Ministry of Finance and the Ministry of Industry and Trade to speed up the equitisation process.
Violations by other fuel companies were also disclosed. For example, Saigon Petro Company does not have standard commission rates for their agents.
Other shortcomings in administrating the fuel price stabilisation fund were also mentioned at the conference: for example keeping the companies compensated even though the fund has been exhausted.
The price adjustment and compensation rate for companies are made within a 30 day period so it cannot catch up with world prices. Previously, the government had set an annual limit to the amount of fuel each company is allowed to import and this limit is now posing threats to the market balance.
Deputy State Auditor General Le Minh Khai said the management regulations must be tightened. The stabilisation fund will be unnecessary once they successfully implement the market-based mechanism.
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