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Official Gazette

Monday, August 21, 2017

Draft rules to strictly manage the domestic gas market

Updated: 11:49’ - 10/02/2015

The Ministry of Industry and Trade has recently unveiled the third draft of a decree on liquefied petroleum gas (LPG) trading which is designed to replace Decree No. 107 dated November 26, 2009.

Note worthily, the draft stipulates that LPG traders may operate in the form of general sales agent, provided that they satisfy a number of conditions, specifically, having an enterprise registration certificate indicating the business line of LPG trading; owning a storage of a minimum capacity of 2,000 gas cylinders; having a distribution network comprising gas bottle retailers, LPG supply or autogas filling stations and at least 10 qualified agents. Each general agent must also have a valid sales agency contract with an LPG dealer, effective for at least one year.

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Maintaining gas conduit equipment at Ca Mau Gas Company__Photo: Huy Hung/VNA

Earlier, the second draft outlined only two levels for the distribution system: dealers and sales agents. General agents were excluded. This has stirred fear among existing LPG general sales agents who have made a hefty investment to meet operation requirements.

Under the third draft, gas dealers would be allowed to choose the form of distribution system that is most suitable to their business. They might distribute gas via general sales agents or sell directly to gas retail outlets, or both.

The new draft also tightens regulations on retail sales. Accordingly, sales agents or retail outlets would only be permitted to buy gas from only a single source, either a general sales agent or a dealer. Particularly in Ho Chi Minh City, gas retail outlets which are registered as business households would be required to buy gas only from a single general sales agent.

This regulation would restrict the business rights of gas retailers but can help simplify the distribution network, thus facilitating the control of the gas market by dealers and state authorities.-

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