Circular No. 56/2009/TT-BTC on guiding the mechanism for the formation, use, and settlement of the Oil Stabilization Fund

CIRCULAR

Regarding guiding the mechanism for forming, using, and settling accounts for

the Fuel Price Stabilization Fund

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Pursuant to the Price Ordinance No. 40/2002/PL-UBTVQH10 dated May 10, 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 Decree No. 170/2003/NĐ-CP dated December 25, 2003 of the Government detailing the implementation of certain provisions of the Price Ordinance; and the Decree No. 75/2008/NĐ-CP dated June 9, 2008 of the Government amending and supplementing certain provisions of Decree No. 170/2003/NĐ-CP;

Pursuant to Decision No. 04/2009/QĐ-TTg dated January 9, 2009 of the Prime Minister on contributing to the Fuel Price Stabilization Fund;

After receiving the opinion of the Ministry of Industry and Trade in Circular No. 0566/BCT-TTTN dated January 20, 2009;

The Ministry of Finance guides the mechanism for forming, using, and settling accounts for the Fuel Price Stabilization Fund as follows:

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation:

Circular This Circular guides the mechanism for forming, using, and managing the Fuel Price Stabilization Fund (hereinafter referred to as the Stabilization Fund).

Article 4. Scope of Application:

1. This Circular applies to Vietnamese traders as stipulated by the Law on Trade, engaging in imported fuel sales or domestic production and processing of fuel for sale in the domestic market (hereinafter referred to as key fuel traders).

Fuels imported by enterprises permitted to import for direct production, not sold on the market as prescribed by law; or brought in under the Investment Law; or imported for sample display at trade fairs; or aid supplies, whether repayable or non-repayable, are not subject to this Circular.

2. Fuels specified in this Circular include gasoline, diesel, kerosene, and mazut.

Article 3. Principles for Calculating and Registering Fuel Sales Prices:

In the last quarter of each year, key fuel traders base their forecast of average world market prices (Platt's Singapore) for the next three months for each type of fuel they plan to purchase to calculate their cost price for sale.

The cost price for sale is calculated as: the average Platt's Singapore price plus (+) external costs (such as transportation, insurance, etc.) or premium multiplied (x) by the exchange rate at the commercial bank where the trader primarily conducts transactions, plus (+) taxes, fees, and other payments as prescribed by the State, plus (+) business expenses (maximum 600 dong per liter for gasoline, diesel, kerosene; maximum 400 dong per kilogram for mazut), plus (+) maximum profit of 300 dong per liter or kilogram, plus (+) the mandatory amount to be contributed to form the Stabilization Fund as stipulated in Chapter II of this Circular.

Key fuel traders implement a registration system for indicative pricing with the Joint Supervisory Board of the Ministries of Finance and Industry and Trade on fuel prices, subject to supervision by the Joint Supervisory Board and regulations on the management and control of fuel sales prices issued by the Ministry of Finance.

PART II

MECHANISM FOR FORMING, USING AND MANAGING
THE FUEL PRICE STABILIZATION FUND

Article 4. Mechanism for Forming the Fuel Price Stabilization Fund:

1. Various Key fuel traders have the right to proactively implement international practices and current domestic regulations in the fuel trading process (import and domestic consumption), bear responsibility for the effectiveness of their business operations, and establish a separate account for the Stabilization Fund for the purpose of regulating market prices and stabilizing prices.

2. The Stabilization Fund is formed from the cost item included in the structure of the selling price to accurately and fully reflect the retail price per liter of gasoline, kerosene, diesel, and wholesale price per kilogram of mazut sold in the domestic market.

The domestic market selling price is established according to the provisions of Article 3, Chapter I of this Circular, plus a maximum of 500 dong per liter (kilogram) to establish the Stabilization Fund; in cases where world fuel prices rise higher or fall lower than the world prices stipulated in Article 5 below, enterprises may contribute a higher amount than the above limit, or temporarily refrain from contributing as appropriate to market conditions based on the announcement of the Joint Supervisory Board of the Ministries of Finance and Industry and Trade on fuel prices after receiving instructions from the leadership of the Joint Ministries of Finance and Industry and Trade.

The total amount contributed to establish the Stabilization Fund is accumulated from the contribution amounts specified above for the actual volume of fuels sold in the month and year.

Article 5. Mechanism for Extracting and Using the Price Stabilization Fund to Manage Prices and Stabilize Gasoline Sales Prices:

Enterprises may proactively use the Price Stabilization Fund in the following cases:

1. When the average price of finished gasoline and diesel on the world market (Platt's Singapore price) in a month decreases, causing the cost price calculated by the enterprise according to Article 3 of Chapter I and Article 4 of Chapter II of this Circular to decrease more than 500 VND per liter (kilogram) compared to the current domestic selling price of each type of gasoline and diesel, the enterprise maintains the current selling price in accordance with the time period stipulated by the State for ensuring the minimum level of circulating fuel reserves. After this period, if the cost price decreases by more than 500 VND per liter (kilogram) compared to the current domestic selling price, the enterprise shall adjust the selling price from the point where the cost price decreases by more than 500 VND per liter (kilogram). The enterprise may proactively implement multiple price reductions without limitation on the extent of reduction; however, the maximum price reduction shall not exceed the cost price calculated by the enterprise according to Article 3 of Chapter I and Article 4 of Chapter II of this Circular. The Price Stabilization Fund shall not be used to reduce the selling price of gasoline and diesel. 2. When the average price of finished gasoline and diesel on the world market (Platt's Singapore price) in a month increases, causing the cost price calculated by the enterprise according to Article 3 of Chapter I and Article 4 of Chapter II of this Circular to increase higher than the current domestic selling price of each type of gasoline and diesel, enterprises maintain the current selling price in accordance with the time period stipulated by the State for ensuring the minimum level of circulating fuel reserves; the difference in losses arising from maintaining the selling price at a stable level compared to the cost price shall be covered by the Price Stabilization Fund.

After the period of maintaining the selling price, if:

- The world market price remains low or stable, causing the cost price to be equal to or lower than the current selling price by up to 500 VND per liter (kilogram), the enterprise continues to maintain the domestic selling price;

- The world market price continues to rise higher, causing the cost price calculated by the enterprise according to Article 3 of Chapter I and Article 4 of Chapter II of this Circular to be higher than the current selling price of each type of gasoline and diesel, the enterprise has the right to adjust the selling price after completing the price registration process according to the current regulations, but the maximum adjustment for each time shall not exceed 500

VND per liter (kilogram). During the period of maintaining the selling price as stipulated by the State for ensuring the minimum level of circulating fuel reserves, if the cost price calculated by the enterprise according to Article 3 of Chapter I and Article 4 of Chapter II of this Circular is higher than the current selling price of each type of gasoline and diesel and the remaining balance of the Price Stabilization Fund is exhausted, the enterprise has the right to adjust the selling price after completing the price registration process according to the current regulations, but the maximum adjustment for each time shall not exceed 500

VND per liter (kilogram). During the period of maintaining the selling price as stipulated by the State for ensuring the minimum level of circulating fuel reserves, if the cost price calculated by the enterprise according to Article 3 of Chapter I and Article 4 of Chapter II of this Circular is higher than the current selling price of each type of gasoline and diesel and the remaining balance of the Price Stabilization Fund is exhausted, the enterprise has the right to adjust the selling price after completing the price registration process according to the current regulations, but the maximum adjustment for each time shall not exceed 500

In subsequent cycles, if the cost price continues to increase by more than 500 VND per liter (kilogram) compared to the current selling price of each type of gasoline and diesel, the enterprise shall follow the above procedure for adjusting prices.

5. If the world market price decreases, the enterprise shall follow the procedure for reducing prices as stipulated in Clause 1, Article 5, Chapter II of this Circular.

Article 6. Accounting and Settlement of the Price Stabilization Fund:

1. Enterprises have the responsibility to fully and accurately account for the amount set aside for the Price Stabilization Fund in their expenses for the period. The expense for setting aside the Fund is considered a reasonable and valid expense when determining taxable income.

2. The Price Stabilization Fund is used to implement price stabilization for gasoline and diesel. In necessary cases, the use of the Fund shall be carried out according to the directives of the Prime Minister or the agency authorized by the Prime Minister.

If the total Price Stabilization Fund implemented for price stabilization in a year has a surplus, the enterprise is permitted to carry it forward to the next year.

3. On a regular basis, at the end of each quarter, enterprises engaged in primary gasoline and diesel trading shall submit reports to the Ministry of Finance and the Ministry of Industry and Trade regarding the situation of revenue, expenditure, and balance of the Price Stabilization Fund at the reporting date.

Chapter III

IMPLEMENTATION

Article 7. Responsibilities of relevant agencies:

1. The Department of Corporate Finance shall take the lead in coordinating with the Price Management Department (Ministry of Finance) to supervise the collection, expenditure, and balance of the Price Stabilization Fund of petroleum trading enterprises.

2. The Price Management Department (Ministry of Finance) shall take the lead in coordinating with the Domestic Market Department (Ministry of Industry and Trade) to propose and report to the Heads of the Joint Ministries (Finance - Industry and Trade) for decisions on the level of collection into the Price Stabilization Fund by petroleum trading enterprises, or temporarily suspend collection when world petroleum prices fluctuate abnormally.

3. Petroleum trading enterprises shall be responsible for implementing price stabilization tasks for petroleum according to the directives of the Prime Minister or authorized agencies, and simultaneously carry out the collection and expenditure from the Price Stabilization Fund in accordance with the provisions of this Circular.

In case petroleum trading enterprises fail to comply with the provisions of this Circular, they will be subject to penalties under current laws.

Article 8. Effective date.

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

2. The Director of the Price Management Department, the Director of the Department of Corporate Finance, the Director of the Tax Policy Department, petroleum trading enterprises, and heads of related units shall be responsible for implementing this Circular.