PetroVietnam calls for protectionism, says cheap imports will hurt local refineries

By Pham Ha Nam – Ha Anh, Thanh Nien News

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Dung Quat  -- Vietnam's first oil refinery, opened in the central province of Quang Ngai in 2009. Photo: Dao Ngoc Thach Dung Quat -- Vietnam's first oil refinery, opened in the central province of Quang Ngai in 2009. Photo: Dao Ngoc Thach

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State-owned Vietnam Oil and Gas Group has asked the government to limit fuel imports when the country's second oil refinery comes on stream in 2017 to prevent stockpiles. 
The oil giant, commonly known as PetroVietnam, said in a statement that the government should start planning measures to make local businesses use products from its two oil refineries, Dung Quat and Nghi Son.
PetroVietnam said that the combined capacity of the two refineries will reach 18.1 million cubic meters in 2018, above the estimated local demand of around 17.3 million cubic meters for gasoline, diesel and jet fuel. 
The company said that selling products from Nghi Son will be a challenge since they will be more expensive than imports, which will benefit from low tariffs under free trade agreements. Import duties on fuel products will be cut gradually over the next decade before being scrapped completely. 
Dung Quat, the country’s first oil refinery, opened in 2009, while construction on the $9-billion Nghi Son started in October 2013. PetroVietnam contributed a quarter of the investment while the rest coming from Japanese and Kuwait investors.
'Unfair competition'
The group in early 2013 also tried to lobby the government against licensing a refinery by Thailand’s top energy firm PTT, in a bid to protect its own refineries. But the project was still approved. 
The company now said that Vietnamese oil products will not be able to compete at home unless the government “tightly controls the amount of fuel imports.”
Economist Le Dang Doanh said that the request is unreasonable. 
He said foreign businesses can file lawsuits if the government allows unfair competition.
“The refineries should instead cut their prices to compete with imports.”
Dang Dinh Dao, a lecturer at the National Economics University, agreed: “You can't force local businesses to use your products.”
Dao expressed concern that if the government gives in to PetroVietnam request, it will create a monopoly.
“Consumers and businesses will gain nothing from that,” he said. 

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