The Vietnam National Petroleum (Petrolimex) should be divided into different independent companies to avoid the possibility of a monopoly developing, said some local experts.
Petrolimex should be divided into different independent companies to avoid the possibility of a monopoly developing
Dr. Le Dang Doanh said independent firms should operate in import, export, distribution and retail. In addition the group’s privatisation process should be boosted, allowing the participation of experienced international partners in the group’s management board.
Associate Prof. Dr. Ngo Tri Long said the domestic petroleum market is running under the half-market mechanism. Currently, the market lacks real competition because Petrolimex accounts for more than 50% of market share, with PV Oil and Saigon Petro holding an additional combined 30% of the market.
Long also added that the privatisation of Petrolimex should be quickened to reduce its market share.
Sharing this opinion, Former Deputy Director of the Hanoi Department of Industry and Trade Vu Vinh Phu said, to remove the dominance of only a few companies in the petroleum sector, the government should speed up the construction of oil refineries and petrochemical plants in areas around the country in order to ensure supplies in the next 5-10 years. To provide an equal playing field and to help increase competition, foreign investors should be permitted to enter the domestic petroleum market.
“For many countries, they often divide companies with big market shares into small units or move them into other business activities. The privatisation of Petrolimex is not easy because of the state of the firm’s infrastructure and market share, therefore, this decision would need strong determination by the government and other agencies,” Long emphasised.
Competition Management Agency
According to Dr. Le Dang Doanh, the concern that the division of Petrolimex would affect the national energy security is groundless because in many countries, all petroleum firms are privately-owned.
“Privatisation of a big bank like Vietcombank also allows foreign firms to take part in its management. Petrol sales are a form of retail sales, so the participation of foreign firms is nothing special. Besides breaking up the firm during the privatisation process, the name of petroleum group should be removed,” he suggested.
He pointed out that, to date, the Competition Management Agency under the Ministry of Industry and Trade has struggled to control the monopoly in the petroleum sector.
The Ministry of Industry and Trade proposed the power sector’s privatisation roadmap, but it was been rejected by EVN, revealing the ministry’s weak management.
“The role of Competition Management Agency needs to be enhanced and it should be separated from the Ministry of Industry and Trade, so that it could have an independent voice in controlling monopolies and competition. Such agencies abroad often belong to National Assembly,” he said.
At a recent petroleum conference, Dr. Vu Dinh Anh said to create an equal competitive petroleum market, the government should restrict the licensing of petroleum import and businesses. Petrolimex’s dominance should be lifted first and then the separate import and trading of petroleum products from retail activities should be introduced.
