Dung Quat, run by Binh Son Refining and Petrochemical (BSR), has adjusted the investment of $1.25 billion, or VND31.24 trillion, including VND10.92 trillion of equity and VND16.379 trillion of loans ($659 million). The expanded refinery is scheduled to become operational in Q1/2028.

The investment capital is lower than the initial estimate, when the project was approved in December 2014, with $1.81 billion, with an expectation to operate in 2022.

According to the investor, the only adjustment of the investment deal is replacing the goal of raising the capacity from 148,000 barrels per day to 192,000 barrels with the target of raising the capacity from 148,000 to 171,000 barrels per day.

The investor explained that the changes in investment capital, input material sources, and increased EPC prices have led to the increase in required investment. This prompted the investor to change the investment plan.

According to the pre-feasibility study, the project on upgrading Dung Quat in 2021-2025 needs $66 million (VND1.641 trillion) of equity. The owner’s equity needed for the 2021-2025 period is VND12.561 trillion.

In its report on December 20, 2022, BSR said it plans to accumulate VND22.965 trillion from undistributed profits in 2021-2025 which is reserved for investment.

However, MPI said this is just an assumption which is not a basis for assessing feasibility.

The ministry has also said that BSR must obtain approval from competent agencies to use undistributed profits (BSR shareholders’ general meeting mentions approval of a statement about issues related to the upgrading and expansion of Dung Quat, but there is no detailed content).

Commenting about BSR’s capital mobilization capability ($659 million), MPI said that if BSR can satisfy banks’ requirements and banks can provide loans as committed, BSR would be able to borrow $575-675 million.

Stressing that upgrading and expanding Dung Quat is an urgent need, MPI proposed that the Prime Minister assigned PetroVietnam to instruct BSR to select contractors to inspect the pre-feasibility study of the expansion project. This is needed for the Prime Minister to consider the investment.

Luong Bang