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NEW UPDATES Asean Affairs    20 January 2015  



Draft law sets out regulations for gas trading

 The State has maintained the number of general sales agent in the domestic gas trading system in its third draft on gas-trading regulations.

This draft is an amendment to Decree 107/2009, released by the Ministry of Trade and Industry.

In this third draft, the ministry has also added business conditions for general sales agent of gas, reported Nguoi Lao dong newspaper.

The conditions are similar to those mandated by existing regulations, including obtaining a business registration certificate and a warehouse with a minimum of 2,000 gas tanks in inventory. The general sales agent must have a gas distribution network, including shops selling gas tanks, stations providing gas, and a group of at least 10 other agents who meet existing regulations. They must also have a current sales agent contract with a gas dealer, effective for at least one year.

Initially, the second draft had outlined two levels for the system: dealers and sales agents. General sales agents were excluded. In theory, this measure would reduce the number of intermediaries, leading to cut the selling price and help dealers properly monitor the delivery of goods to customers.

However, in practice, some dealers in the local market have sold gas to customers via general sales agents who offer cheaper selling prices than the dealers selling directly to retail outlets.

In addition, under existing regulations, general sales agents must contribute a hefty investment to meet operating requirements, especially for meeting conditions that ensure fire safety.

Therefore, many general gas sales agents have been worried about whether they will be able to stop running the business in view of the regulations listed in the second draft.

The general sales agents, dealers, the southern branch of the association of gas traders, and the HCM City Trade and Industry Department have jointly proposed that the removal of general gas sales agents from the local market should be reconsidered.

Under the third draft, the gas dealers have the right to choose a distribution system that is most compatible with their business. They can distribute gas via general sales agents or sell directly to gas retail outlets, or both.

The new draft has also tightened regulations for retail sales, stipulating that sales agents or retail outlets are only permitted to buy gas from a single source - either a general sales agent or a dealer - rather than from sources as they do at present.

In HCM City, gas retail outlets, which are considered household traders rather than enterprises, must buy gas from a single general sales agent only.

This regulation could restrict the business rights of gas retailers but would help enterprises and state management offices to easily control the gas distribution system in the future. Gas companies would then compete fairly in the domestic market.



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