New regulations on fuel distribution in Vietnam

Decree 83/2014 issued in early September 2014 and effective from 1 November 2014 introduces several changes to the current regulations on fuel distribution. So below is an updated description of the fuel distribution network in Vietnam under Decree 83/2014. 

Distribution level

Status within the distribution network

Key licensing conditions

Key rights and obligations

Top level distributor

 

 

 

Fuel importers

·         A fuel importer is situated at the top of the distribution network.

·         A fuel importer imports fuel from overseas or purchases fuels from other top level distributor.

·         A fuel importer wholesale fuels to (1) other top level distributors, (2) general agents, (3) retail agents, (4) fuel wholesale distributor and (5) franchised retail distributor.

·         A fuel importer may retail fuel though its own fuel retailing stations.

·         Having special berths for sea-going vessels at international ports of Vietnam, which can receive oil tankers of at least DWT 7,000 tons. A fuel importer must own, jointly own or lease a special berths for at least 5 years;

·         Having fuel storage facility of at least 15,000 m3 which can directly receive fuels from tankers or other fuel transportation means. A fuel importer must own, jointly own or lease a fuel storage facility for at least five years. Three years after being licensed, a fuel importer must own at least 51% of the fuel storage facility with a storage capacity of at least 1/3 of the total reserve amount applicable to such fuel importer;

·         Having at least 10 filling retail station and 40 general agent or retailing agents. Each year after being licensed, the fuel importer must open at least 4 new fuel retail station until there are at least 100 retail stations within its distribution network;

·         Having a Fuel Import and Export Licence issued by the MOIT; and

·         A Fuel Import and Export Licence could be revoked if the fuel importer ceases to operate for a quarter or more, ceases to satisfy the conditions of a fuel importer or violates other obligations including reserve maintenance obligations.

·         Maintain a minimum reserve of 30 supply days according to its average last year annual sale until 2025. Thereafter, the Prime Minister will decide on the level of minimum reserve. The reserve is divided into reserve for national energy security and market supply reserve;

·         Mixing fuel using raw materials if there is qualified laboratory and registration with the Ministry of Science and Technology;

·         Registering its distribution network with the MOIT;

·         Importing raw materials for fuel mixing after registering the import plan with the MOIT;

·         Establishing a price stabilization fund;

·         Deciding fuel retailing price to be applied in its distribution network except for fuel sold to wholesale fuel distributor;

·         Having title over all petrol under possession of its distribution networks except for those sold to wholesale distributor or franchised retail distributor;

·         Having joint and several liabilities arising from violation of any general agent, retail agent or retail franchised distributor within its distribution network; and

·         Introducing bio fuel to the distribution network according to a schedule approved by the Prime Minister.

Fuel producer

·         A fuel producer is situated at the top of the distribution network.

·         A fuel producer may import raw material for producing fuels directly or via agent subject to approval by the MOIT;

·         A fuel producer may wholesale fuel produced by it to (1) other top level distributors, (2) general agents, (3) retail agents, (4) fuel wholesale distributor and (5) franchised retail distributor.

·         A fuel producer may retail fuel produced by it through its own retailing station.

·         Having a fuel producing facility in compliance with approved master plan;

·         Having a qualified testing lab; and

·         Having a Fuel Producing Licence issued by the MOIT.

·         Maintain a minimum reserve of 30 supply days according to its last year annual average sale until 2025;

·         Cannot import fuel or raw material for fuel mixing;

·         Developing a distribution network in the same manner as a fuel importer and registering the same with the MOIT;

·         Having title over all petrol under possession of its distribution networks except for those sold to wholesale distributor or franchised retail distributor;

·         Having joint and several liabilities arising from violation of any general agent, retail agent or retail franchised distributor within its distribution network;

·         Processing fuel for domestic use or export;

·         Establishing a price stabilization fund; and

·         Deciding fuel retailing price to be applied in its distribution network except for fuel sold to wholesale fuel distributor

Middle level distributor

 

 

 

Wholesale Fuel Distributor

·         This is a new kind of middle level distributor under Decree 83/2014

·         A wholesale fuel distributor may purchase fuel from one or more fuel importers or fuel distributor. This is the key difference between a wholesale fuel distributor and other middle level distributor.

·         A wholesale fuel distributor may supply its fuel to retail agents by way of an agency arrangement or to franchised retail distributor under a franchising arrangement.

·         Having a storage facility of at least 2,000 m3. The wholesale fuel distributor must own, jointly own or lease the storage facility for at least 5 years;

·         Having a distribution network covering at least two provinces;

·         Wholly owning at least 5 filling retail station and wholly or partly owning at least 10 filling retail station;

·         Having specialized transportation means which is owned, jointly owned or leased for at least 5 years by the wholesale fuel distributor;

·         Having a qualified laboratory or a service contract with a qualified laboratory;

·         Having A Fuel Distribution Licence issued by the MOIT which is valid for 5 years; and

·         A Fuel Distribution Licence can be revoked if the wholesale distributor ceases to operate for one month, any conditions for a Fuel Distribution Licence is not satisfied or violation of other obligations including violation regarding quality or pricing.

·         Cannot act as a general agent or agent for a top level distributor or for another middle level distributor;

·         Registering its distribution network with the MOIT;

·         Leasing storage facility or fuel transportation means from qualified fuel service providers;

·         Selling fuel to end-users at a price determined by the wholesale fuel distributor in accordance with the principles provided in Decree 83/2014;

·         Having joint and several liabilities for violation of other distributors within its own distribution network;

·         Having a mechanism to monitor the travel routes of all fuel transportation means;

·         Introducing bio fuel to the distribution network according to a schedule approved by the Prime Minister; and

·         Registering its store opening time with the local Department of Industry and Trade (DOIT).

General Agent

·         A general agent acts as a sale agent for one and only one top level distributor (except in case the top level distributor does not distribute biofuel);

·         A general agent may wholesale fuel to a retail agent within its distribution network under an agency arrangement;

·         A general agent may retail fuel at its own retailing station

·         Having a storage facility of at least 2,000 m3 (down from 5,000 m3) which is owned, jointly owned or leased for at least 5 years by the General Agent;

·         Having specialized transportation means which is owned, jointly owned or leased for at least 5 years by the General Agent;

·         Wholly owning at least 5 filling retail station and wholly or partly owning at least 10 filling retail station;

·         Having a Fuel General Agency Licence issued by the MOIT (in case operating in two provinces) or by the local DOIT (in case operating in one province) which is valid for 5 years; and

·         A Fuel General Agency Licence can be revoked if the general agent ceases to operate for one month, any condition for a Fuel General Agency Licence is not satisfied or violation of other obligations including violation regarding quality or pricing.

·         Selling fuel to end-users at a price not exceeding the retail price decided by the top level distributor;

·         Establishing a distribution network including fuel retail agent and filling retail stores and registering the same with the top level distributor and the local DOIT;

·         Leasing storage facility or fuel transportation means from qualified fuel service providers;

·         Having a mechanism to monitor the travel routes of all fuel transportation means;

·         Having joint and several liabilities for violation of other distributors within its own distribution network;

·         Registering its store opening time with the local DOIT.

 

 

 

 

Bottom level

 

 

 

Fuel Retail Agent

·         A fuel retail agent may act as a sale agent for one and only one (1) top level distributor or (2) middle level distributor except in case such top level distributor or middle level distributor does not distribute biofuel; and

·         A fuel retail agent may retail fuel to end-users as agent for one top level distributor or one middle level distributor.

·         Having qualified filling retail station.

·         Having a Retail Agent Licence issued by a local DOIT if the fuel retail agent owns two or more retail stations. A Retail Agent Licence is valid for 5 years.

·         A Fuel Retail Agency Licence can be revoked if the retail agent ceases to operate for one month, any condition for a Fuel Retail Agency Licence is not satisfied or violation of other obligations including violation regarding quality or pricing.

·         Selling fuel to end-users at a retail price decided by the top or middle level distributor.

·         Subject to monitor and control by the top or middle level distributor;

·         Registering its store opening time with the local DOIT; and

·         Registering its store networks with the local DOIT.

Franchised retail distributor

·         This is a new type of retail distributor under Decree 83/2014

·         A franchised retail distributor purchases fuel from one and only one top level distributor or middle level distributor under a franchising contracts

·         A franchised retail distributor may retail fuel to end-users at its retail stations.

·         Having qualified filling retail station.

·         There is no separate licence issued to a franchised retail distributor.

 

·         Selling fuel to end-users at a retail price decided by the top or middle level distributor under the franchising contract.

·         Subject to monitor and control by the top or middle level distributor;

·         Registering its store opening time with the local DOIT; and

·         Registering its store networks with the local DOIT.

Filling retail station

·         This is the lowest level under a fuel distribution network

·         A filling retail station is supplied fuel by the distributor controlling such filling retail station.

·         A filling retail station may retail fuel to end users.

·         Being owned or jointly owned by a top level distributor, a middle level distributor, a retail agent or a franchised retail distributor;

·         The location of the filling retail store must comply with approval master plan;

·         Having a Fuel Retailing Station Licence by the local DOIT which is valid for 5 years; and

·         A Fuel Retailing Station Licence can be revoked if the retail agent ceases to operate for one month, any condition for a Fuel Retail Agency Licence is not satisfied or violation of other obligations including violation regarding quality or pricing.

·         Being controlled by another fuel distributor;

·         Can only cease to supply fuel after approved by the local DOIT;

·         Notifying the local DOIT at least 30 days in advance before ceasing to receive fuel from the fuel supplier for the relevant retail station; and

·         Displaying at the retail station the brand name of the top level distributor or the Wholesale Fuel Distributor supplying fuel to such retail station

 

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Written by Nguyen Quang Vu On In