Circular No. 159/2009/TT-BTC Amending and Supplementing Circular No. 56/2009/TT-BTC dated March 23, 2009 of the Ministry of Finance guiding the mechanism for forming, using, and settling the Petroleum Stabilization Fund

CIRCULAR

Regarding the amendment and supplementation of Circular 56/2009/TT-BTC dated March 23, 2009 guiding the mechanism for forming, using, and settling the fuel price stabilization fund

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Pursuant to the Price Law No. 40/2002/PL-UBTVQH10 dated April 26, 2002 of the Standing Committee of the National Assembly;

Pursuant to the Decree No. 118/2008/NĐ-CP dated November 27, 2008 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Pursuant to the Government Decree No. 170/2003/NĐ-CP dated December 25, 2003 detailing the implementation of certain provisions of the Price Law; and the Government Decree No. 75/2008/NĐ-CP dated June 9, 2008 amending and supplementing some articles of the Government Decree No. 170/2003/NĐ-CP;

Pursuant to the Prime Minister's Decision No. 04/2009/QĐ-TTg dated January 9, 2009 on the allocation to the fuel price stabilization fund;

The Ministry of Finance amends and supplements Circular No. 56/2009/TT-BTC dated March 23, 2009 of the Ministry of Finance on guiding the mechanism for forming, using, and settling the fuel price stabilization fund as follows:

Article 1. Amending and supplementing Article 3 of Circular No. 56/2009/TT-BTC dated March 23, 2009 as follows:

"The basic retail cost price is calculated as: [CIF price plus (+) Import tax plus (+) Special consumption tax] multiplied (x) Exchange rate plus (+) Value Added Tax plus (+) Fuel oil fee plus (+) Compulsory contribution to the fuel price stabilization fund plus (+) Other taxes, fees, and other contributions according to current laws plus (+) Business costs of enterprises plus (+) Prescribed profit margin.

Where:

- The basic retail cost price is calculated on average for each unit of goods in accordance with the storage and circulation time stipulated by law.

- The CIF price is the world price of fuel as published by Platt's Singapore calculated on average for each unit of goods in accordance with the storage and circulation time stipulated by law plus (+) additional costs incurred to bring fuel to Vietnamese ports (insurance costs, transportation costs...).

- The exchange rate is the actual selling average rate of commercial banks at the time of determining the price, where enterprises engaged in fuel trade frequently conduct transactions to import fuel.

- The business costs of fuel are calculated at a maximum of 600 dong per liter for gasoline, kerosene, and diesel; a maximum of 400 dong per kilogram for heavy fuel oil, and will be adjusted specifically to suit each period.

- The prescribed profit margin is calculated at a maximum of 300 dong per liter (kilogram) corresponding to the basic retail cost price. The actual profit earned by enterprises depends on their production and business efficiency.

Enterprises engaged in wholesale fuel trade shall implement the registration system for indicative selling prices with the Joint Supervisory Body of the Ministry of Finance and the Ministry of Industry and Trade on fuel prices, subject to supervision by the Joint Supervisory Body and regulations on the management and control of fuel selling prices issued by the Ministry of Finance."

Article 2. Amending and supplementing Clause 2 of Article 4 of Circular No. 56/2009/TT-BTC dated March 23, 2009 as follows:

"2. The price stabilization fund is established by a specific, fixed amount within the basic retail cost price at 500 dong per liter (kilogram) and is determined as a cost item in the cost structure to form the basic retail price of fuel for enterprises.

Depending on the fluctuations of the world market price, the Joint Supervisory Body of the Ministry of Finance and the Ministry of Industry and Trade will notify specifically the level and timing of contributions to the price stabilization fund lower than, higher than, or temporarily suspended from the above regulation, as appropriate to the market situation after receiving instructions from the leadership of the Joint Ministry of Finance and Industry and Trade."

Article 3. Amending and supplementing Article 5 of Circular No. 56/2009/TT-BTC dated March 23, 2009 as follows:

“Article 5. Mechanism for using the Fuel Stabilization Fund to stabilize fuel prices:

1. When the average world price of fuel during the storage and circulation period in Vietnam decreases, causing the basic retail cost price to decrease more than the current domestic retail price by up to 500 dong per liter (kilogram) for each type of fuel, enterprises maintain the current selling price in accordance with the time specified by the State to ensure the minimum level of storage and circulation. After this period, if the basic retail cost price of each type of fuel continues to decrease by more than 500 dong per liter (kilogram), enterprises adjust the selling price downward starting from the point where the cost price decreases by more than 500 dong per liter (kilogram). Enterprises may proactively reduce prices multiple times without limitation, but the maximum reduction cannot exceed the basic retail cost price. The Fuel Stabilization Fund shall not be used to reduce the selling price.

2. When the average world price of fuel during the storage and circulation period in Vietnam increases:

a) In cases where the Fuel Stabilization Fund has sufficient financial resources to stabilize prices:

When the finished fuel price on the world market increases, making the basic retail cost price calculated according to this Circular higher than the current domestic selling price of each type of fuel by up to 500 dong per liter (kilogram), enterprises maintain the current selling price in accordance with the time specified by the State to ensure the minimum level of storage and circulation. The loss difference arising from maintaining the selling price below the basic retail cost price is covered by the Fuel Stabilization Fund.

After the period of maintaining the selling price above, during the subsequent storage and circulation period:

- If the world market price remains low or stable, resulting in the basic retail cost price being equal to or lower than the current selling price by 500 dong per liter (kilogram), enterprises continue to maintain the current selling price domestically.

- If the world market price continues to rise, causing the basic retail cost price calculated according to this Circular to be higher than the current selling price by 500 dong per liter (kilogram), enterprises are allowed to adjust the selling price after implementing the price registration system according to current regulations, but the maximum adjustment per time cannot exceed 500 dong per liter (kilogram). In subsequent cycles of the storage and circulation period, if the basic retail cost price continues to increase by more than 500 dong per liter (kilogram) compared to the current selling price, enterprises shall follow the aforementioned procedure for adjusting the selling price. The loss difference arising is covered by the Fuel Stabilization Fund.

b) In cases where the Price Stabilization Fund has been fully utilized, there is no remaining balance, or the Price Stabilization Fund does not have sufficient financial resources to stabilize prices, when the price of refined oil products on the global market increases sharply, causing the cost price of the enterprise's retail base price calculated according to the provisions of this Circular to be higher than the current domestic selling price; the enterprise is entitled to adjust the selling price after implementing the pricing registration system as stipulated in the current regulations to adjust the price in accordance with the fluctuations in the cost price of refined oil products on the market without being bound by the provisions of paragraph a of Clause 2 of Article 2 of this Decree.

Article 4. EFFECTIVE DATE

1. This Circular takes effect from the date of signature.

The Director of the Price Management Department, the Director of the Enterprise Finance Department, the Head of the Tax Policy Department, the Head of the Accounting System and Audit Department, the main oil and gas enterprises, and the heads of relevant units are responsible for implementing this Circular./.