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Petroleum companies may only charge a maximum rate of 20% according to proposed regulation.

Byeditor

Apr 2, 2024

The Ministry of Industry and Trade is proposing a new decree that would change the way gasoline prices are regulated. Instead of setting a base price for businesses to determine their retail prices, the Ministry is suggesting that businesses calculate their own prices based on the 7-day average world price announced by the State. This draft is a replacement for previous decrees on petroleum business and was consulted by the Ministry from April 1, just 5 days after the first draft.

Under the current regulations, the State sets a base price that serves as a ceiling price for businesses to determine their retail prices. However, the Ministry of Industry and Trade believes that this mechanism involves too many steps and does not allow businesses to proactively decide on their prices. The base price is calculated based on historical factors that may not reflect current market conditions, leading to prices that are not close to reality.

In the new draft, the Ministry proposes that the State not regulate gasoline prices and instead allow businesses to calculate their own maximum selling price based on the average world price and some fixed costs. This price announcement period will be shortened to 7 days instead of 15 days. Business expenses and profit norms will be added to calculate the maximum selling price, and businesses will have two options for determining these costs.

The Ministry believes that this new mechanism will create a competitive environment for gasoline prices and help businesses be more autonomous in setting their prices. The draft also includes regulations related to the Price Stabilization Fund and requires periodic reporting on warehouse use by focal points. Overall, the goal of the new decree is to streamline the process of setting gasoline prices and make it more reflective of market conditions.

By editor

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