Dung Quat greenlighted to set own prices
Dung Quat greenlighted to set own prices
Prime Minister Nguyen Xuan Phuc has issued a decision to license Dung Quat Oil Refinery, operated by Binh Son Refining and Petrochemical Co., Ltd. (BSR), to set its own selling prices from January 1, 2017 to enable its products to compete with foreign imports, according to newswire Vnexpress.net.
Notably, BSR will be exempt from import taxes on diesel as well as materials for Jet A1 fuel, a able cut from the initial level of 10 per cent. In addition, the government will remove the regulatory charges applied for BSR’s products, including liquefied petroleum gas (LPG), oil, and petrochemical products, consumed in the domestic market. However, the government will somewhat curb these incentives by adding 3-7 per cent to the import taxes on BSR’s gasoline prices.
Tran Ngoc Nguyen, BSR’s general director said that the PM’s decision will help the company enhance its competitiveness. Currently, the refinery meets 40 per cent of the domestic demand, while the remaining 60 per cent is covered by imports. In this light, the decision will drive domestic distributors towards using domestic petroleum products.
Nguyen added that increasing the consumption of BSR’s products will help Dung Quat oil refinery reach maximum capacity. BSR expects to pay VND16 trillion ($718.8 million) to the state coffers in 2016. If the refinery’s capacity increases by 10 per cent, BSR will contribute an additional VND1.6 trillion ($71.88 million).
“Being licensed to calculate our own selling price also helps the company prove its transparency in manufacturing and business, while simultaneously creating a platform for attracting domestic and foreign investors to BSR’s initial public offering (IPO) at the end of 2017,” Nguyen stated.
Earlier in May, BSR asked the Ministry of Finance for permission to calculate the selling price of petrol on its own because its sales had been steadily dropping due to a sharp decrease in import tariffs after Vietnam joined a variety of free trade agreements.
Notably, when the Vietnam-Korea Free Trade Agreement was signed, Vietnam halved the import tariff on South Korean gasoline products to 10 per cent, effective from December 20, 2015. Meanwhile, Dung Quat’s products were still subject to an import tax of 20 per cent, forcing a number of its local consumers to switch to other imported sources.
In addition, BSR also proposed the Ministry of Industry and Trade (MoIT) to export Dung Quat’s products. However, the MoIT crushed the proposal, arguing that the government already put high priority on consuming Dung Quat’s products on the domestic market, aiming to decrease dependence on imported petrol as well as cut back on the foreign trade deficit.
