An oil refinery belonging to Thailand's top energy company PTT. PHOTO COURTESY OF PTT
A US$21.5 billion refinery backed by a Thai company in the central province of Binh Dinh won't enjoy the same preferences its state-owned competitors projects do, the Ministry of Finance announced.
The ministry recently sent a letter to the central government in response issued by Thai energy firm PTT Pcl.
The ministry argued that the government granted tax, land use and market preferences to Dung Quat and Nghi Son plants (both of which were backed by the state-owned PetroVietnam) to solve Vietnam's supply-demand situation and to fulfill the country's strategies on energy security.
The projects, which were the first in Vietnam, were conducted under a national plan that had been studied at length, whereas the plans for PTT’s Nhon Hoi refinery as well as its economic impact remain unclear, so the investor’s proposal for similar preferences was deemed “unjustifiable."
The ministry rejected PTT’s proposal for income tax incentives for the same reasons.
The investor for the 660,000 barrel per day (one of the largest in the world) Nhon Hoi refinery recently pared its estimated investment from $27 billion to $21.5 billion, Thoi bao Kinh te Saigon Online reported, quoting a source from Binh Dinh provincial authority.
PTT had requested that its factory prices be equal to the import price (plus duties) on similar products.
The ministry offered the Nhon Hoi plant duty free crude imports and a maximum land use of 70 years saying that the preferences are already stipulated by existing laws.
Le Huu Loc, chairman of the Binh Dinh People’s Committee, told an economic conference last week that a feasibility report on the mega refinery project is expected to be submitted to the government next month.
Construction of the refinery, which will cover some 2,000 hectares in the Nhon Hoi Economic Zone, is scheduled to begin in 2016.
The refinery is expected to go online three years later, he said.
PTT says it will contribute some 40 percent of the estimated investment, according to Thoi bao Kinh te Saigon Online.
The plant will import crude from the Middle East, Africa, and South and Central Americas. Half of its output will be exported to China, Japan and other countries in Asia.
The mega project faces opposition from PetroVietnam, which insists that PTT’s plant will upset the supply-demand situation in Vietnam. The state-owned group had hoped to meet 70 percent of domestic demand for oil products with its Dung Quat refinery in Quang Ngai Province and Nghi Son refinery in Thanh Hoa Province.
However, Nhon Hoi has received support from government officials and analysts who expect it to have a have positive impact on the economy by boosting exports and strengthening competition in the domestic market, leading to lower gasoline prices.
Like us on Facebook and scroll down to share your comment