The Ministry of Finance has sent out three inspection teams to look into oil product prices at major fuel traders after a heated debate between government officials over whether the firms are making losses as they claim.
Petrolimex, PV Oil and two other distributors are expected to report their business costs for the year through September 15. Inspectors will also look into how they have managed their price stabilization funds so far.
The inspection was launched after officials of the Finance Ministry and the Ministry of Industry and Trade could not see eye to eye on the recent 2.3 percent cut in retail oil product prices.
Nguyen Loc An, deputy head of the Dosmetic Market Department under the Ministry of Industry and Trade, told a meeting Tuesday that he found the Finance Ministry's decision to lower petroleum prices late last month questionable. Fuel companies were suffering huge losses at the time, he said.
But Finance Minister Vuong Dinh Hue said Petrolimex, the largest fuel trader with a market share of around 60 percent, was actually making profits, enjoying a return of up to VND780 per liter.
That did not even include a markup of VND300 per liter that fuel traders are allowed to add to their retail prices, Hue said.
Petrolimex CEO Bui Ngoc Bao was then brought into the discussion. He said his company posted a loss of VND1.8 trillion in the first eight months and the recent price cut could lead to an additional loss of VND200 billion in September.
However, Bao could not provide a breakdown of petrol costs as requested by the Finance Minister.
Nguyen Anh Tuan, deputy head of the Finance Ministry's Price Control Department, said in an interview in Friday's Tuoi Tre newspaper that there may be signs of corporate fraud because Petrolimex CEO could not explain the losses.
Tuan also said the decision to lower fuel prices was made based on statistics provided by customs agencies and that it was the right move.
The Ministry of Finance has recently become tougher with fuel companies.
Last week it turned down a proposal by fuel distributors to raise retail petroleum prices and ordered them to ensure stable supplies for the market.
Minister Vuong Dinh Hue said businesses have to be responsible for difficulties caused by their own corporate governance. He also said the ministry would not tolerate threats from any business.
"If any company wants to quit the market, they will be allowed to do so. If Petrolimex wants to quit, we will set up a new corporation immediately. Businesses can't just say whatever they want," Hue said.