Petroleum Stabilization Fund: The Need for an Intermediary Agency

The Petroleum Stabilization Fund's misbehavior has recently heightened public concern. Several events have come to light, showing faults in fund administration that might lead to losses, theft, and recovery difficulties.

For example, Xuyen Viet Oil, a Transport and Tourism Trading Limited Company, misappropriated a considerable quantity from the fund, but this issue was only revealed when the company's officials were detained. Similarly, Bach Khoa Viet Corporation, a Trading, Consulting, Investment, and Construction Joint Stock Company, stole funds without being discovered until later stages.

Recently, Hai Ha Marine Transport Company, which had approximately 270 billion VND in the Petroleum Stabilization Fund, had its debt deducted by BIDV Bank - Long Bien Branch and has failed to return the fund, highlighting yet another cautionary tale in fund administration.

Given the current circumstances, many people advocate for a more effective monitoring and administration structure for the Petroleum Stabilization Fund. There is a lack of a really secure structure for handling this money, according to Truong Thanh Duc, a lawyer and Executive Board member of the Vietnam Business Managers Association. Although Joint Circular No. 39/2014/TTLT-BCT-BTC expressly forbids the use of the stabilization fund for business capital or other purposes, these restrictions are essentially guidelines with no particular procedures in place to guarantee compliance.

As a result, Truong Thanh Duc proposes establishing an intermediary management agency for the fund or, at the absolute least, obligatory protections to preserve it.

Furthermore, controlling the fund requires a combination of indirect and direct monitoring approaches, according to Associate Professor Dr. Dinh Trong Thinh, a senior professor at the National Academy of Public Administration. Indirect monitoring should include monthly reporting to the Ministry of Industry and Trade from intermediary merchants documenting the previous month's fund operations and providing outcomes for each fund operation cycle.

To ensure control over money movements, the Ministry of Industry and Trade should use technology to connect fund information with intermediary dealers and commercial banks where traders keep accounts.

Dr. Dinh Trong Thinh advocates administrative fines for minor offenses and barring dealers who commit major infractions from continuing to trade in petroleum. Legal action and sanctions for embezzlement should be conducted in accordance with the law.

Nguyen Tien Thoa, Chairman of the Vietnam Appraisal Association, highlights the need of openness in money allocation. He proposes that the operations of intermediate petroleum merchants be completely transparent, and that the money allotted to the Stabilization Fund by these traders be placed in bank accounts in registered accounts. The necessary authorities should properly report, verify, and cross-check each allocation, employing technology to assure correctness and prevent manipulation.

It is important to highlight that the Petroleum Stabilization Fund is made up of cash collected from citizens through retail gasoline prices, with the goal of stabilizing fuel costs. Currently governed by Ministry of Finance Circular No. 103/2021/TT-BTC, the full budget, once granted, is utilized to regulate and sustain domestic gasoline prices in accordance with the Ministry of Industry and Trade's fuel price management regulations.

Deputy Prime Minister Le Minh Khai has directed further research on regulations focusing on managing and supervising the Stabilization Fund and delegating tasks to relevant authorities in a recent directive to amend Decree No. 83/2014/ND-CP and Decree No. 95/2021/ND-CP concerning petroleum business.