The central province of Quang Ngai urged the Government to provide policy incentives for Dung Quat Refinery equal to those enjoyed by Nghi Son Refinery to ensure fair competition.

A view of Dung Quat Oil Refinery in Quang Ngai Province. — Photo congthuong.vn

In a proposal sent to the Government, Chairman of Quang Ngai Province People’s Committee Tran Ngoc Cang said the petrol and oil market was witnessing a supply surplus after Nghi Son Refinery went into operation and started selling its products in May.

As of September, Nghi Son Refinery had pumped nearly one million cu.m of petrol and oil into the market. While domestic demand remained low, the proposal reported that the market had a supply surplus of around 800,000 cu.m.

The excess of supply over demand made things difficult for Dung Quat Refinery.

Meanwhile, the province said the refinery was enjoying less preferential tax policies than Nghi Son Refinery in Thanh Hoa Province.

Dung Quat Refinery mainly imported crude oil from Azerbaijan which was subjected to an import tax of 5 per cent. In comparison, Nghi Son Refinery was enjoying a zero per cent tax on its crude oil imports.

The document also said Dung Quat was facing difficulties raising capital to expand and upgrade the refinery as the Government would not guarantee loans.

Seeking equal treatment, the province asked the Government to remove the import tax on crude oil from Azerbaijan.

The province asked the Government to allow Dung Quat Refinery to continue production of Euro 2 emissions standard products until the factory completes its expansion.

Tran Viet Ngai, Chairman of the Viet Nam Energy Association, was quoted by Dat Viet newspaper saying the biggest difficulty for the refinery was the shortage of capital needed to implement the expansion project.

The expansion project needed a total investment of US$1.8 billion, $1.27 billion of which must be borrowed and required a Government guarantee for the loans.

However, Dinh Trong Thinh from the Academy of Finance said the refinery could not be an exception as the Government reserved loan guarantees for enterprises that need to control debts within the safety zone.

Thinh also disagreed with Quang Ngai Province’s proposal of eliminating the import tax on Azeri crude oil for the refinery.

He said that in a market economy, enterprises must seek for reasonable supply source. He asked why Dung Quat Refinery did not import crude oil from countries with lower import taxes.

Quang Ngai’s proposal of allowing the refinery to continue producing Euro 2 emissions standard products deserves careful consideration, Thinh said, adding that Euro 2 fuel products were no longer appropriate to Viet Nam and many other countries.

According to the roadmap, Dung Quat Refinery must provide Euro 5 emissions standard products from 2022. — VNS