What are domestic premiums and costs for transporting petrol and oil from domestic refineries to ports to calculate price of petrol and oil in Vietnam?
What are domestic premiums and costs for transporting petrol and oil from domestic refineries to ports to calculate price of petrol and oil in Vietnam? What are regulations on standard operating costs in Vietnam? Please advise.
1. What are domestic premiums and costs for transporting petrol and oil from domestic refineries to ports to calculate price of petrol and oil in Vietnam?
Pursuant to Article 6 of Circular 104/2021/TT-BTC, which stipulates domestic premiums and costs for transporting petrol and oil from domestic refineries to ports to calculate price of petrol and oil as follows:
1. Domestic premiums only serve calculation of price of domestically produced petrol and oil under the formula for base price in accordance with Article 1 of Decree No. 95/2021/ND-CP. These costs are determined using weighted average of petrol and oil quantity purchased by major petrol and oil traders from major petrol and oil producers or from enterprises contractually authorized to sell all petrol and oil products of oil refineries in calculation period.
Premiums used for calculating price of domestically produced petrol and oil must not be higher than the average worldwide price multiplied (x) by the lowest excise tax rates applied to petrol and oil products according to international agreement (in case the lowest excise tax rates for petrol and oil is greater than 0%). The average worldwide price serving as the basis for comparison shall be determined on the basis of average petrol and oil price traded by major petrol and oil traders in the calculation period.
2. The costs for transporting petrol and oil from domestic refineries to ports (if any) only serve calculation of base price in accordance with Article 1 of Decree No. 95/2021/ND-CP. These costs shall be determined using weighted average of quantity.
Costs for transporting petrol and oil from domestic refineries to ports consist of costs incurred during transportation of petrol and oil of major petrol and oil traders from oil refineries to special seaports and type I seaports in accordance with The Maritime Code, documents guiding the Vietnam Maritime Code and amending documents (if any); including insurance costs, transportation costs, depreciation costs, and other costs (if any); excluding: storage costs, warehouse costs, incurred costs for hiring other means to transport petrol and oil to storage situated in seaports.
3. Major petrol and oil traders are responsible for sending reports consolidating domestic premiums and costs for transporting petrol and oil from domestic refineries to ports (if any) using Form under Annex 2 attached hereto to Ministry of Finance (Department of Price Management) before June 21 and December 21 annually. Figures of the report which is submitted on June 21 shall be collected from December 1 of the previous year to May 31 of the reporting year. Figures of the report which is submitted on December 21 shall be collected from June 1 to November 30 of the reporting year.
4. Ministry of Finance (Department of Price Management) shall consolidate, review, assess, and (if necessary) request additional reports and physical inspection on the basis of reports submitted by major petrol and oil traders.
Ministry of Finance shall announce domestic premiums and costs for transporting petrol and oil from domestic refineries to ports (if any) on January 10 and July 10 annually (or the next working day if the required date is a holiday or is not a working day) to enable Ministry of Industry and Trade to apply and calculate base price. In case of any irregular change (increase or decrease) to the costs caused by objective reasons, Ministry of Finance (Department of Price Management) shall request major petrol and oil traders to submit reports on costs incurred in their entities on the basis of propositions of agencies, organizations, and individuals (if any). Ministry of Finance shall then assess and cooperate with Ministry of Industry and Trade in adjusting accordingly.
2. What are regulations on standard operating costs in Vietnam?
According to Article 7 of Circular 104/2021/TT-BTC stipulating standard operating costs are as follows:
1. Standard operating costs are the maximum general costs serving calculation of base petrol and oil price in accordance with Article 1 of Decree No. 95/2021/ND-CP. Standard operating costs are costs for circulating petrol and oil domestically (costs for wholesaling and retailing in actual temperature) of major petrol and oil traders (including costs for major distributors, major retailers, petrol and oil general agents, and petrol and oil agents) and serve calculation of the maximum base price. Standard operating costs shall be determined on the basis of reports on incurred costs of major petrol and oil traders. In which:
- Types of gasoline, diesel oils, and kerosene include wholesale and retail costs; or wholesale costs for mazut oil.
- Quantity of petrol and oil serving calculation shall be kilogram and liters of petrol and oil traded domestically in the reporting period.
2. Major petrol and oil traders are responsible for submitting the following specialized reports to Ministry of Finance (Department of Price Management) and Ministry of Industry and Trade (Domestic Market Department) before March 31 annually:
- Audit report on operating costs;
- Report on operating salaries for petrol and oil agents, petrol and oil general agents, distributors, petrol and oil retailers, and other customers (if any);
- Report on quantity of petrol and oil purchased, sold, and stored for each type of petrol and oil.
3. Ministry of Finance (Department of Price Management) shall consolidate, review, assess, and (if necessary) request additional reports and physical inspection on the basis of reports submitted by major petrol and oil traders.
Ministry of Finance shall announce standard operating costs before July 1 annually to enable Ministry of Industry and Trade to apply and calculate base petrol and oil price. In case reasonable and legitimate costs increase or decrease irregularly as a result of objective factors and thereby affect operations of the entities, on the basis of agencies, organizations, and individuals (if any), Ministry of Finance (Department of Price Management) shall request major petrol and oil traders in writing to submit reports on practical costs incurred at the entities. The Ministry of Finance shall assess and cooperate with Ministry of Industry and Trade to adjust accordingly.
Best Regards!
