After more than 2 months from the effective date ofDecree No. 19/2016/NĐ-CP of Vietnam’s Government on gas business, many gas businesses find themselves in a "difficult" situation due to economic constraints when they have to comply with a number of conditions in their business activities.
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Recently, at the Conference to collect opinions of organizations and individuals on administrative procedures regulations of the Industry and Trade sector in 2016, many small and medium-sized enterprises have raised some inadequacies in current regulations, especially the frustrations surrounding the company's gas business conditions.
Many businesses believe that Decree No. 19/2016/NĐ-CP of Vietnam’s Government, which stipulates conditions on tank area, number of tanks as well as regulations ensuring a minimum number of agents, is beyond their capabilities. Gas distribution enterprises must ensure the following conditions:
- Having leasing storage tanks with the total capacity of at least 300 m3 for bottled LPG distributors;
- 100 m3 for distributors dispensing LPG through pipeline;
- 3,000 m3 for LNG;
- 10,000 m3 for CNG distributors.
Moreover, having at least 20 LPG general agents or agents that satisfy certain provisions.
Every LPG general agents must have at least 1-year agreement on leasing storage tanks with the total capacity of at least 2,000 PLG bottles (except for mini-sized PLG bottles) and bottled PLG and own distribution channels with at least 10 agents or agents that satisfy requirements stipulated in Decree No. 19/2016/NĐ-CP.
Starting from the above regulations, representatives of gas business enterprises of Khanh Hoa province - Ms. Nguyen Thi Thuy Trang said this regulation puts businesses in a difficult situation. There are businesses that are about to die after spending 50 billion VND to invest in accordance with prescribed standards while the market demand is not high compared to the amount of supply of the business. She was upset that the regulations of the Ministry of Industry and Trade were unreasonable, overwhelming for businesses and causing unnecessary waste.
Regarding the issue of signing a business agency contract according to Decree No. 19/2016/NĐ-CP, the agent must choose and sign a contract to act as an agent for a general agent or 3 wholesale gas traders. Ms. Trang asserted: "The regulation that gas agents can only sign contracts to act as agents for one general agent or 3 key gas traders limits the business's freedom to do business.".
According to Mr. Tran Trung Nhat - Director of Thai Duong Gas Company (Tay Ninh), right from the stage of collecting comments on the Draft for Decree No. 19/2016/NĐ-CP, many businesses had comments but they were not fully received.
In addition to the shortcomings in Decree No. 19/2016/NĐ-CP, many opinions suggest that general regulations should be based on the actual scale of business operations, rather than rigidly giving such quantitative numbers.
In the spirit of getting opinions from businesses, Deputy Minister of Industry and Trade - Tran Quoc Khanh recognized positive contributions and will resolve outstanding shortcomings raised by gas businesses. Also according to the Deputy Minister, the purpose of the document drafting agency is to issue regulations to establish order in the gas business market, ensuring consumer safety and healthy competition in commodity trading activities.
