An official from the Ho Chi Minh City Department of Industry and Trade once likened gas trading to “time bombs within residential areas,” reflecting the risks caused by loose management. Although LPG is a conditional business that can pose environmental and safety hazards, it has, for more than a decade, been regulated merely by an old circular from the former Ministry of Trade.
From a situation once described as “loose beyond measure” by both legitimate gas enterprises and government authorities, the LPG market will soon face much stricter control starting January 15. The new tightening measures are expected to push many small businesses out of the market.
For years, nearly every weekly market management report submitted by the Ho Chi Minh City Market Surveillance Agency to the municipal People’s Committee and the Department of Industry and Trade has included numerous violations in gas trading. During recent meetings between authorities and gas businesses, market regulators admitted that “violations are too numerous to control,” illustrating the current chaos of the gas market.
According to Mr. Nguyễn Sĩ Thắng, Chairman of the Board of Directors of the Southern Gas Trading Joint Stock Company and Chairman of the Vietnam Gas Association, although Vietnam’s gas market has developed for 13 years and expanded rapidly, it remains highly disorganized and poorly regulated.
Nationwide, there are about 70 gas companies, yet only 40 have registered trademarks. Of 127 gas filling and bottling enterprises, only 39% have been granted proper business licenses. Consequently, major gas companies estimate that up to 30% of LPG cylinders circulating on the market are counterfeit or refilled illegally from unauthorized facilities.
This situation has led to a chaotic gas market, and in recent years, fires and explosions have frequently occurred at gas refilling plants and retail outlets.
Furthermore, widespread licensing and the lack of coordination among multiple authorities have made safety control difficult, even though LPG trading is officially a conditional business under Government Decree No. 19/1999/NĐ-CP dated March 3, 1999. The specific legal provisions are scattered across 17 different regulatory documents involving seven ministries, including the Ministry of Industry and Trade, the Fire and Rescue Police, the Environment, and the Construction sectors.
According to the Vietnam Gas Association, while the domestic LPG market has existed for only 13 years, it has expanded rapidly. Annual consumption now reaches about one million tons, of which 78% is imported. Domestic production is almost entirely sourced from the Dinh Cố Gas Processing Plant in Bà Rịa–Vũng Tàu. It is forecast that consumption may reach 1.5 million tons in the coming year due to the growing demand of the economy.
While most conditional business sectors have been governed by comprehensive government decrees, the LPG industry has, for the past decade, been regulated primarily by a single, rather outdated document — Circular No. 15/1999, issued by the Ministry of Trade. Many businesses note that this circular was enacted when the gas market was in its infancy and public understanding of LPG was still limited.
After years of complaints about lax state management, the new regulations will tighten control to the point where even legitimate small and medium-sized enterprises (SMEs) may be forced out due to limited capital and lack of infrastructure such as ports, storage facilities, and sufficient LPG cylinders — giving way to a handful of large corporations.
According to Government Decree No. 107/2009/NĐ-CP, issued on November 26, 2009 and effective from January 15, 2010, the gas market will now be strictly regulated — from business conditions (storage capacity, number of LPG cylinders, fire and explosion safety) to importation, distribution, and pricing — all comprehensively defined within a 49-page legal framework.
Mr. Hoàng Thọ Xuân, Director of the Domestic Market Department (Ministry of Industry and Trade), which participated in drafting the decree, stated that gas is a sensitive and essential commodity that affects many sectors. Therefore, a dedicated decree providing comprehensive oversight of the gas market is something consumers have long awaited.
However, with these stringent conditions, many existing LPG companies will likely be eliminated. For instance, to qualify as a primary gas importer, a business must have a port owned or leased for at least one year that meets technical standards for receiving gas vessels; a storage facility with a minimum capacity of 3,000 m³; at least 300,000 LPG cylinders (excluding mini cylinders); and a distribution network of at least 40 general agents or agents.
Under these requirements, dozens of current gas importers may be reduced to only a few major players, such as Vietnam–Thailand Gas Co., Ltd. (VT-Gas), the Southern Gas Trading Joint Stock Company (PV Gas South), and Petrolimex Gas.
What is more concerning is that small and medium distributors, even those operating legitimately, may find it difficult to continue. The decree requires level-1 distributors to possess at least 300,000 LPG cylinders, storage facilities with a minimum capacity of 800 m³, and a distribution system with at least 20 agents.
Additionally, distributors are restricted to representing no more than three wholesalers, which could make it easier for leading suppliers to manipulate the market within their distribution networks. Of the more than 100 current distributors and filling facilities, it is estimated that only about 20 large enterprises will remain.
Even retail gas shops face tighter controls: they may only sign contracts to receive gas cylinders from a maximum of three wholesalers and are prohibited from selling gas products from other brands circulating on the market. In reality, most retailers currently sell gas from multiple brands, allowing them to offer customers competitive prices.
Although the decree provides a nine-month grace period for small businesses to upgrade their facilities to meet the new standards, many argue that the requirements are too demanding for SMEs to fulfill — even within one or two years, let alone nine months.
(Source: Thời Báo Kinh Tế Sài Gòn, December 20)
