D.Gankhuyag: Petroleum price increases could have been larger
The Minister of Mining, D.Gankhuyag, has submitted to the Speaker of Parliament Z.Enkhbold proposals to make changes to the Special Approval for Industry and Enterprises Operations Law, and to the law concerning petroleum-based products.
Minister Gankuyag discussed the proposals with journalists.
-What was the reason for these proposals?
-The Innovation Government is implementing many policies to regulate and stabilize the retail distribution of petroleum goods. For example, the appropriate amount of reserve of petroleum goods has been extended to 60 days, and the tax relief for wholesale petroleum sellers has been changed. And many other measures have been implemented, such as the soft loans granted by Mongolbank to fuel importers to prevent fluctuation of fuel prices. The main purpose of these new proposal is to allow retailers of petroleum products to have the same special permits that wholesale petroleum sellers have. The reason is that the government is working with fuel importers to stabilize the retail price of fuel; hence it is right that they be included in a special permit. Currently, when fuel importing companies break the law, the only penalty the State can issue is to cancel their special permits. Measures are needed before this, at the administrative level. These proposals allow this.
-When you discuss administrative responsibility, is it to do with the Fair Competition law?
-If fuel importers agree to fix prices and therefore artificially increase the price without any market basis, this is in breach of the Fair Competition law. If they received soft loans from the Mongolbank, it means they have signed an agreement. This means they must provide accurate reports. If they are not able to fulfil their agreement, they will face administrative penalties.
-To stabilize fuel prices, Mongolbank has implemented programs such as issuing soft loans to fuel importers. But fuel prices have been increasing anyway. What is the reason for this? How much money was lent to the private sector?
-Yes, loans have been granted. The 8 percent interest loan was reduced to 4 percent. In the reports of the companies that received loans, this is recorded as a loan interest cost. The interest cost was 36,500, now it is 12,000. But the custom tax for petroleum imports increased for four consecutive months. If this measure had not been taken, the fuel price increase would have been considerably greater than 50 MNT per litre. Mongolia is almost entirely dependent on our northern neighbour (Russia) for its petroleum fuel supply.
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